Fri, Mar 30, 2012 - Page 11 News List

Panel to probe employee costs at utility companies

BALANCING INTERESTS:While Taipower’s employee costs account for only 6.3% of annual costs, fuel costs are 70%, so changes in fuel prices have a bigger impact

Staff writer, with CNA

Minister of Economic Affairs Shih Yen-shiang (施顏祥) said yesterday that the government would establish a panel to discuss employee costs at state-run utility companies amid public criticism that staff are receiving large bonuses while the government mulls electricity and oil price hikes.

The government would review employee costs at state-run utility companies, the minister said at a legislative session during which the annual budgets for Taiwan Power Co (Taipower, 台電), Taiwan Water Corp (台灣自來水公司) and Aerospace Industrial Development Corp (漢翔航空) were reviewed.

The main reason a hike in electricity and oil prices is being considered is to reflect higher fuel costs for the companies in question, Shih added.

For example, employee costs at Taipower account for only 6.3 percent of total annual costs, but fuel costs account for 70 percent, he said, adding the panel would report its findings within three months.

Asked when the ministry planned to announce increases in electricity prices, Shih said the issue was still being considered, but an official announcement would be made at least one month before any increase.

The ministry would take poor and disadvantaged groups into account when considering price increases, Shih said, adding that one possibility being discussed was higher rates for heavy users.

As to whether higher electricity prices would help offset the about NT$100 billion (US$3.38 billion) losses currently incurred by Taipower, Shih said it would be a while before the company returned to financial health. If electricity prices were not increased to reflect higher fuel prices, the company would incur additional losses of NT$10 -billion a month, he said.

Currently, the ministry does not plan to increase water prices, he added.

The issue of whether domestic electricity and fuel prices should be increased has recently triggered debate in the legislature after Taipower projected a deficit of NT$75.5 billion this year, which it said could exceed NT$100 billion because of rising fuel costs.

CPC Corp, Taiwan (中油), the state-run petrochemical refiner, is currently absorbing costs of NT$5.4 per liter for gasoline and NT$5.5 per liter for diesel. At current levels that would translate into an annual shortfall for the company of about NT$12 billion, the ministry said.

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