Taiwan Power Co (Taipower, 台電) defended itself yesterday against accusations from Chinese-language Next Magazine that its planned rate hike is unreasonable given its controversial management practices.
The state-run power company on Tuesday announced the pricing levels for its next rate hike — set to take effect in October.
A story in Next’s latest issue, released yesterday, said Taipower had no reason to raise rates because many of its business strategies are controversial.
The article listed what it said were five corrupt practices at the company: overspending on the electricity bought from local independent power producers (IPP); issuing debt to build new power plants; continual additions to its annual budget;, a “rotten” corporate culture; and improper distribution of employee compensation.
Taipower chairman Hwang Jung-chiou (黃重球) told a press conference yesterday that the utility is undergoing a series of “changes” to fix its financial structure.
However, it needs to raise rates because of its rising losses, he said.
“Taipower has accumulated losses [of more than NT$200 billion (US$6.7 billion)] since 2003 because it has not adjusted its pricing structure for a long time,” Hwang said.
“The October rate hikes are set to reflect increases in international fuel prices,” which include coal, oil and natural gas, he added.
The Next article cited a study conducted by Chinese Nationalist Party (KMT) Legislator Lo Shu-lei (羅淑蕾) that found the IPPs that Taipower buys from, such as Star Energy Corp (星能電力), Sun Ba Power Corp (森霸電力), Mai Liao Power Corp (麥寮汽電) and Ever Power IPP Ltd (長生電力), have earned a combined profit of NT$120 billion since 2003 while Taipower has posted about the same figure in accumulated losses over that period.
Taipower said its financial health is unrelated to the profitability of the IPPs.
The company denied that the IPPs made “huge profits,” as the magazine claimed, saying the average investment among the producers is NT$30 billion and their annual return on investment is about 4.3 percent. Taipower officials refuse to say if that return rate was high or low.
The magazine said Taipower had inappropriately increased its budget for building new plants, including the Fourth Nuclear Power Plant in New Taipei City’s (新北市) Gongliao District (貢寮).
Taipower said the additional budget reflected changes made to construction projects, rises in the consumer price index and the costs of delays to construction work caused by environmental protests.
As for Lo’s claim that the utility’s large workforce has been a serious burden, Taipower said it has laid off 5,074 staff and cut employee compensation by 45 percent since 1992.
The article cited a company employee as saying: “Taipower has too many senior executives who read newspapers, rest in air-conditioned rooms, receive fat paychecks, but contribute nothing to the company.”
Taipower said it would continue its plan to reduce the NT$1.54 billion it spends annually to buy electricity from IPPs, as well as liquidating land assets to increase its revenue.
MANUFACTURERS COMPLAIN
In related news, semiconductor and steel manufacturers said the October rate hike will increase their costs and squeeze their profitability. Their rates would rise 10.4 percent to 12.2 percent, less than the previously proposed hike of 11.6 percent to 13.6 percent.
Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s biggest chip packager and tester, said the rate hike, is expected to cut its gross margin by about 0.2 percentage points.
Even though the rate hike will be lower than expected, the increase will still have an impact on operations, ASE said. Electricity rates account for 3.5 percent to 4 percent of its total operating costs.
Siliconware Precision Industries Co (矽品精密) also expects the higher rates to increase its operating costs, as electricity bills make up about 3.5 percent of its total costs. It did not give further details.
China Steel Corp (中鋼) said that based on an 11 percent hike, it will be paying between NT$2.78 and NT$3.1 per kilowatt hour more, which means it might have to spend an additional NT$200 million on electricity for the fourth quarter. That would raise its operating costs for next year by almost NT$800 million.
Feng Hsin Iron and Steel (豐興鋼鐵) said it pays about NT$200 million per month for electricity and the higher rates would add NT$20 million per month to its bill.
Additional reporting by CNA
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last