Fri, Aug 10, 2018 - Page 12 News List

October electricity hike not to top 3% as fuel prices rise

PARTIAL RELIEF:Shen Jong-chin said that Taipower plans to maintain an operating reserve margin of about 6% through the end of the year and raise that to 10% next year

By Lisa Wang  /  Staff reporter

Minister of Economic Affairs Shen Jong-chin yesterday answers reporters’ questions on his way to a meeting at the Ministry of Economic Affairs in Taipei.

Photo: Huang Pei-chun, Taipei Times

Electricity rate hikes are to remain capped at 3 percent, in line with regulations, the Ministry of Economic Affairs said yesterday in an effort to calm fears that it might allow a more drastic 7 percent price hike as rising fuel costs squeeze the profitability of state-run utilities.

The ministry’s remarks came after Taiwan Power Co (Taipower, 台電) said it was mulling to lift electricity rates for a second time this year, as rapid increases in the prices of crude, gas and coal caused losses of NT$24 billion (US$783.65 million) in the first six months of the year.

The cost of fuel imports made up 60 percent of Taipower’s overall generation costs.

The company has to pass the mounting costs on to users to keep its operations healthy, Taipower chairman Yang Wei-fu (楊偉甫) said.

“Under a mechanism created by the electricity price committee, electricity price changes are limited to a 3 percent hike or cut [every six months],” Minister of Economic Affairs Shen Jong-chin (沈榮津) told reporters.

To fully reflect cost increases, the state-run company would have to hike power rates by 7 to 10 percent.

The shortfall would be compensated by allocating a sum from a stabilization fund, which stands at NT$79 billion, Shen said.

“We will respect the committee’s decision,” Shen said.

The pricing mechanism went into effect last year.

The committee holds two meetings yearly, in April and October, to discuss electricity rates.

Taipower in April raised its electricity prices by 3 percent.

Shen also dismissed lingering fears over a constrained electricity supply.

Taipower expects to maintain an operating reserve margin of about 6 percent through the end of the year as new power generation gradually come online and existing generation units resume normal operations as they come out of major maintenance, he said.

The operating reserve margin should rise to 10 percent next year, he added.

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