Utilities price mechanism is on the way, MOEA says

The Ministry of Economic Affairs is planning a comprehensive price-making mechanism for utilities by year's end before possible markups for water and electricity rates come into force, incoming Ministry of Economic Affairs Vice Minister Hou Ho-hsiung (侯和雄) said yesterday.

"We hope to unveil thorough price-making formulas and a reassessment of water and electricity rates and gasoline prices by the end of this year," Hou said on the sidelines of his inauguration ceremony yesterday.

The ministry has asked the state-run Chinese Petroleum Corp (CPC, 中油) to refrain from raising the price of oil -- at least before the Mid-Autumn Festival this weekend -- for fear of provoking inflationary pressure, after smaller rival Formosa Petrochemical Corp (台塑石化) announced a 10 percent increase in wholesale prices earlier this month.

"Oil prices are a more urgent issue," Hou said when asked about the state oil refiner's possible price hike. "In the meantime, the ministry will continue monitoring the movement of the price of crude oil, which has declined recently."

The price of CPC oil has been much lower than skyrocketing crude-oil prices but has still been profitable, Hou said, adding that the ministry was seeking to balance the firm's profitability in an environment of rising costs and public expectations.

The refinery created pre-tax income of NT$16.2 billion (US$500 million) in the first seven months of this year, way ahead of its regulatory pre-tax income of NT$14.9 billion for this year, according to figures from the ministry's Enterprise Commission.

Hou, 61, yesterday formally replaced Yin Chi-ming (尹啟銘), who has been appointed an Executive Yuan adviser on water-supply problems experienced in Taoyuan County since Typhoon Matsa last month.

With his expertise in water-resources engineering, Hou will oversee water resources-related units -- the Water Resources Agency and Taiwan Water Corp (自來水公司), as well as mining and energy-related units and state firms -- the Bureau of Mines, the Bureau of Energy, the CPC and the Taiwan Power Co (台電).

Hou will have to deal with thorny issues such as adjustments to gasoline and electricity rates, water supply from the Shihmen Reservoir in Taoyuan and the proposed eight-year NT$80 billion flood-control bill.