The Ministry of Economic Affairs yesterday kept electricity rates unchanged for the next six months, rejecting a proposal by Taiwan Power Co (Taipower, 台電) for an 8.21 percent hike — despite regulations limiting increases to 3 percent — as the government aims to stabilize consumer prices amid rising global crude oil prices and flooding in the nation’s south last month.
The electricity rate is to stay at NT$2.6253 per kilowatt-hour, Deputy Minister of Economic Affairs Tseng Wen-sheng (曾文生) said at a media briefing after the committee to review electricity prices concluded a 2.5-hour meeting.
“Our main consideration is consumer prices,” Tseng said. “We do not want to see consumer prices following the upswing in global fuel prices.”
Photo: CNA
Global crude oil prices might pull back later this year, but consumer prices might not follow, because they have less flexibility, Tseng said.
In addition, heavy rains and flooding and have prompted fruit and vegetable prices to rise, propelling consumer prices further upward, he said.
To fully reflect increases in costs after global crude oil prices climbed to US$75 per barrel and coal prices jumped to NT$3,313 per tonne, Taipower proposed an 8.21 percent hike in electricity prices for the next six months.
Taipower is allowed to adjust power rates twice per year. Increases are capped at 3 percent by the Electricity Act (電業法).
Fuel imports made up 55 to 60 percent of Taipower’s overall generation costs, the utility said.
While rejecting Taipower’s proposal, the ministry plans to allocate an unspecified amount of money from the energy price stabilization fund of NT$78.9 billion (US$2.56 billion) to offset the expected shortfall in revenue, Tseng said.
The ministry’s decision would see Taipower’s revenue decline by NT$4.5 billion, the company said.
In the first eight months of the year, Taipower saw its losses shrink to NT$12.7 billion after reporting a loss of NT$21.1 billion for the first six months, due to summer electricity prices, which are higher than regular rates.
The ministry said it is considering including May as a summer month, increasing the period of higher rates to five months ending in September.
“There has been a shift in power consumption over the past three years. Peaks in power use are usually in May, while previously they were in June,” Tseng said.
An extension to the summer electricity rates would help curb rapid power consumption increases, he said.
The ministry is to discuss the proposed extension at the committee’s next meeting in March next year, Tseng said.
That indicates the new summer electricity rates might take effect in May next year, he said.
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