Wed, May 24, 2006 - Page 12 News List

Power hikes could come in July

INEVITABLE Taipower said that the power increases had been forced by rising gasoline and coal prices, but would not be implemented until July at the earliest

By Jason Tan  /  STAFF REPORTER

State-owned Taiwan Power Co (Taipower, 台電) said yesterday that price increases would take effect on July 1 at the earliest, if its proposal is approved by the Ministry of Economics Affairs next week.

The nation's only electricity retailer sent the proposal to the ministry last Friday, and the ministry will convene a special committee to discuss the tariff adjustments next Monday, Taipower chairman Edward Chen (陳貴明) told reporters at a press conference.

The nation's power tariffs have not been raised for the past 23 years, but have been lowered 11 times during the same period, with an average rate of decline of 26.1 percent, according to Taipower.

The last price increase occurred in 1981.

"Escalating fuel and coal prices have been a problem since the second half of 2003. We had no choice but to raise power tariffs to reflect rising costs," Chen said.

The electricity price increases follow moves by state-run Chinese Petroleum Corp (中油) and smaller rival Formosa Petrochemical Corp (台塑石化), which raised wholesale gasoline prices by an average of 8 percent on April 19.

If Taipower's proposal is approved, the average power rate will increase by around 6 percent across all categories, and would most likely take effect on July 1 at the earliest, or as late as Oct. 1 or Oct. 16 -- after summer is over.

Summer is the peak season for electricity consumption, with usage generally increasing by between 13 percent and 27 percent.

Taipower said that there are two separate rate plans each for both households and industrial users.

Households will be required to pay an average of 3.12 percent more after consuming over 330 kilowatt-hours per month, or 2.52 percent after using more than 400 kilowatt-hours per month.

Meanwhile, industrial users will have to shoulder an extra cost of 4.99 percent, or 4.93 percent on average, after using over 330 kilowatt-hours or over 400 kilowatt-hours per month respectively, according to Taipower.

The power retailer has been giving factories preferential rates to aid the nation's economic development. Industrial users pay an average NT$1.7 a kilowatt-hour, compared with NT$2.4 for households.

Industries and businesses consume 65 percent of the nation's total electricity. About half of households use less than 330 kilowatt-hours of electricity per month, the company said.

Regardless of whether or not the rate increases are approved, Taipower will still post losses.

Taipower will incur losses of between NT$9.2 billion (US$287 million) to NT$17.8 billion this year, while next year's losses will range between NT$12.5 billion and NT$17.5 billion, according to Chen.

In the absence of rate increases, Taipower's losses will exceed NT$23 billion this year, he added.

Higher fuel costs caused Taipower's pre-tax earnings to plummet to NT$900 million last year, compared to NT$31.8 billion in 2003.

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