Fri, Dec 31, 2004 - Page 10 News List

Utility hikes to have little impact

RATE INCREASES Economists said that expected rises in electricity and water fees would not affect the nation's economy, as they account for a small portion of the CPI

By Jessie Ho  /  STAFF REPORTER

Increases in water and electricity rates next year will not heavily impact the nation's economy and consumer prices, economists said yesterday.

"The hikes will increase costs for manufacturers that use massive volumes of water and electricity to maintain their operations," said Wu Chung-shu (吳中書), a research fellow at Academia Sinica. "But the impact on consumer prices will be limited."

According to Wu, water only accounts for 0.004 percent of the consumer price index, and electricity makes up for 0.0225 percent of the CPI.

Minister of Economic Affairs Ho Mei-yueh (何美玥) said on Wednesday that the ministry is considering raising fees for electricity and water next year.

Ho didn't specify how large the hikes will be. But she suggested a household of four might see a NT$150 per month rise in their electricity bills after the adjustment.

This translates into about a 15 percent increase, applying the average household's monthly power consumption of 375 kilowatt-hours, as a calculation base.

Academia Sinica predicts the electricity fee increase will be only about 9 percent, Wu said.

Chou Yi-yueh (周義岳), director of Taiwan Power Co's (台電) public relations division, refused to confirm the range of the hike. He said the company has submitted the proposal to the ministry for review.

The ministry still needs to obtain approval from the Cabinet before finalizing the scheme.

As for water rates, Ho said the increase will be higher than for electricity fees, as current rates have been fixed for 10 years and barely reflect costs.

Joses Wu (吳約西), secretary general of the Water Resources Agency, declined to comment on the proposed price hike.

The proposal needs to be reviewed and passed by the legislature, which will begin a new session in February, Wu said.

As the proposed price increases have drawn criticism from the public and among various industries, Premier Yu Shyi-kun stressed yesterday that they will not be implemented before the Cabinet reshuffle.

Chu Yun-peng (朱雲鵬), head of the National Central University's Research Center for Taiwan Economic Development, also said the price increases should not trigger inflation.

"Besides, oil prices are expected to fall next year, which will help lower the consumer price index," Chu said.

Chou Ji (周濟), director of the Chung-hua Institution of Economic Research's (中經院) Center for Economic Forecasting, however, said the price adjustment may help educate consumers on the importance of utility conservation.

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