Thu, Jun 01, 2006 - Page 12 News List

Taipower's price hike `not enough'

BLOOMBERG

Taiwan Power Co (Taipower, 台電), the nation's only electricity retailer, may need further price increases after one planned for July 1 to ensure enough funding to maintain stable power supply, analysts said.

A government committee on Monday recommended the utility be allowed to raise tariffs an average 5.8 percent, the first increase in 23 years. After the increase, Taipower will still post a loss of NT$11.3 billion (US$352 million) for the year, the state-owned company said on Monday night.

"It's not enough," said Liang Chi-yuan (梁啟源), a member of the committee that recommended the increase and an economist at Academia Sinica, the state-run research institute.

"Taipower should raise prices by at least 9 percent," he said in a telephone interview on Tuesday.

Taipower's net income plunged 73 percent last year as the cost of fuels such as natural gas climbed, prompting the utility to sell more bonds to help finance investment in plants and power lines. Without further price increases, Taipower may keep posting losses and fail to invest enough in generators and networks, resulting in electricity shortages, Liang said.

Taipower's net income last year slumped to NT$1.94 billion from NT$7.1 billion in 2004 as operating costs climbed 9.4 percent to NT$346.4 billion, according to Taiwan Stock Exchange data.

"Over the longer term, we hope prices can reflect costs," Stephen Lee (李甘常), vice president at Taipower, said on Tuesday.

The revision will have "no impact" on earnings at China Steel Corp (中鋼), Chung Lo-min (鍾樂民), company executive vice president, said on Tuesday in a telephone interview from the southern city of Kaohsiung, where the company is based.

China Steel buys 20 percent of its electricity from Taipower and generates the rest itself, Chung said. The company may produce more electricity to cut the electricity bill, he said.

The world's largest supplier of custom-made chips, Taiwan Semiconductor Manufacturing Co (台積電), "will keep trying to be more efficient in consuming electricity," company spokesman Tzeng Jinn-haw (曾晉皓) said.

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