Minister of the Interior Lee Hong-yuan (李鴻源) has complained about environmental groups’ failure to support the government’s policy on fuel and electricity price hikes. He is, he says, very disappointed in them.
Increasing electricity prices to make them more adequately reflect cost is necessary if the aim is to promote energy conservation and a more secure society. However, the current price increase policy has some key problems.
First, the public has yet to be told what the price of electricity is at cost. What it does know is that corruption exists within Taiwan Power Co (Taipower), that there are excessively high levels of reserve electricity and that the government has been heavily subsidizing the price of electricity. There has been no investigation into these matters and the government has decided to press ahead with the increases without consulting the public. It really is no wonder that the policy has been so controversial.
Second, on the eve of World Environment Day this year, eco-oriented groups conducted a review of the government’s energy policy over the four years since President Ma Ying-jeou (馬英九) took office. They concluded that Ma’s 2008 campaign promise of an energy tax law has come to naught, languishing in the Cabinet, and a greenhouse gas reduction act has been stalled in the legislature because of a reluctance to iron out the all-important timetable and connected targets. Despite all the talk about carbon trading, the government has failed to deliver on the most crucial carbon reduction policy.
It is quite clear that the price rises are being introduced simply to address the losses made by Taipower and have nothing to do with reducing carbon emissions or conserving energy.
Third, independent estimates suggest that, between 2007 and 2010, the government sold electricity to companies below cost price and spent more than NT$230 billion (US$7.69 billion) to provide this subsidy throughout a four year period. Selling electricity at such a low price gave firms absolutely no incentive to save energy. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major user of power, has said that its energy-saving policies were primarily due to corporate responsibility, not cost-saving considerations.
In the past, the government consistently denied that it had effected these kinds of subsidies and people are still in the dark as to exactly how much it really paid out. Industry accounts for over half the nation’s electricity consumption, so if prices are raised, the government should first announce how much has been spent on subsidizing enterprises. The price that industries pay for their electricity should be the first to reflect the increases.
Finally, if the government really intended the price increases to suppress demand for electricity it should have looked at Germany, where the government has announced zero, or even minus, growth in electricity consumption as a policy goal. Taipower, on the contrary, has plans to expand its electricity output over the next 18 years to cater to ever-increasing demand.
In addition to seven new power plants, with a combined budget of NT$916 billion, it also wants to build another 20 coal-fired units and 22 gas-fired units. It obviously sees the public as a cash cow and this is completely at odds with government policy.