Thu, Oct 03, 2013 - Page 13 News List

Power rate hike may push up CPI, but reduce Taipower’s losses, official says

By Camaon Kao  /  Staff reporter

The latest electricity rate hike may push up the consumer price index (CPI) slightly, but it could also increase the annual revenue of state-run Taiwan Power Co (Taipower, 台電) by NT$50.1 billion (US$1.69 billion), Minister of Economic Affairs Chang Chia-juch (張家祝) said yesterday.

“Based on our study, the higher electricity rates will only increase the production cost of retailers and restaurants by between 0.11 percent and 0.67 percent, and we expect the CPI to increase by less than 1 percent because of this policy,” Chang told a meeting of the legislature’s Economic Committee.

Consumer prices, which rose 0.87 percent in the first eight months of the year compared with the same period last year, are expected to increase 1.07 percent for the full year, Chang said.

He added that the ministry would closely monitor domestic prices and would not rule out disclosing the names of businesses that drastically increase their prices.

Legislators said the CPI does not truly reflect the effect of higher prices on the public.

“The CPI [as a whole] does not reflect the uneven increases in prices in different products, with the prices of daily necessities rising the most,” Democratic Progressive Party (DPP) Legislator Lin Tai-hua (林岱樺) said, citing as examples the prices of chicken and Chinese medicine ingredients, which have risen 9.46 and 10.41 percent respectively this year.

Nonetheless, the latest rate increase, which went into effect on Tuesday, is good news to the debt-ridden Taipower, which saw its accumulated losses reach NT$220 billion last month, or two-thirds of its paid-in capital.

Taipower chairman Hwang Jung-chiou (黃重球) said the power rate increase would help reduce the company’s losses.

The company posted losses of between NT$40 billion and NT$60 billion a year in the past two years, with the losses varying with the prices of coal and gas, Taipower’s public relationship head Chen Chih-hung (陳智宏) said by telephone yesterday.

Chen said Taipower spends about NT$200 billion a year on coal procurement and NT$80 billion on purchasing liquefied natural gas.

“We will still incur a loss of NT$44.1 billion this year,” Chen said.

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