Wed, Sep 12, 2007 - Page 11 News List

Taipower to increase spending 9.1%

PREPARATION Record consumption on three days in July increased concerns about potential blackouts. The company is responding by spending on equipment

BLOOMBERG

Taiwan Power Co (Taipower, 台電), the nation's biggest electricity producer, plans to increase spending on plants, power lines and other equipment by 9.1 percent next year to help prevent blackouts.

Taipower's capital spending will rise to NT$157.2 billion (US$4.8 billion) from NT$144.1 billion proposed for this year, according to the government's draft budget for next year sent to lawmakers. The state-run utility is the country's only grid operator.

Rising investment may force Taipower to increase borrowing because the company may post losses this year and next, caused by government price controls. Taiwan's electricity consumption climbed to records on three days in July, reducing spare capacity to just 32 percent of a government target.

"The focus is on developing new power sources and upgrading our transmission and distribution network," Tu Yueh-yuan (杜悅元), Taipower's chief engineer, said by telephone from Taipei yesterday.

Next year's spending will include NT$23.1 billion on a nuclear power station, NT$41.7 billion on a transmission project and another NT$15.6 billion on distribution lines, according to the government budget.

The government owns 97 percent of the utility, which generates about 75 percent of the electricity the country uses and monopolizes transmission in Taiwan.

Taipower will probably lose NT$44.8 billion next year, 35 percent more than the NT$33.3 billion loss projected for this year, according to the budget.

The company is selling electricity below the cost of producing it as the government restricts it from raising prices, Tu said.

Taipower raised prices by about 5.8 percent in July last year, the first increase in 23 years after the Ministry of Economic Affairs gave its approval.

The company hasn't lifted prices since then.

Taipower expects borrowing -- which includes bonds and bank loans -- to total NT$138 billion this year, the company said last December.

Households in Taiwan had an average of 27 minutes of power outages last year, compared with 28 minutes in 2005, Clint Chou (周義岳), a Taipower spokesman, said in June.

Some power lines have been in use for more than 20 years, he said.

The Council for Economic Planning and Development, the nation's top economic planner, approved a NT$56.8 billion investment by Taipower between next year and 2011 to improve its distribution network, the council said in June.

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