The nation’s power consumption has continued hitting high levels over recent weeks as temperatures keep rising, but state-run utility Taiwan Power Co (Taipower) has assured the public that electricity rationing will not be implemented as long as power generators function normally and the public conserves electricity.
Well, that might be what people want to hear, since businesses and the public routinely face annual summer hikes in electricity rates set by Taipower, which is the nation’s largest electricity supplier and monopolistic grid operator. Electricity price increases from 13 percent are in line with the spike in demand for power during the hot summer months up until Sept. 30.
Yet, what people may not like to hear are allegations that Taipower colluded with privately owned power firms, known as independent power providers (IPPs), to rip off taxpayers through what they say are regular business contracts between them. The public wants to know if Taipower is really being coerced by some IPPs for profiteering, as it has claimed.
In March and November last year, the Fair Trade Commission twice sanctioned nine IPPs for collaborating to sabotage price renegotiations with Taipower from 2008 to 2012. However, the fines of NT$6.32 billion and NT$6.05 billion (US$210.4 million and US$201 million) that the commission levied on the nine firms were revoked by the Cabinet’s Petitions and Appeals Committee in September last year and in May this year respectively. The Cabinet then demanded that the commission reconsider the fines based on the companies’ different cost structures and levels of compliance.
The revocations sounded reasonable, but aroused strong discontent among the public, with many believing that these IPPs profited from unethical conduct and that their behavior has increased Taipower’s deficit, which consequently raises electricity rates. On July 9, the commission upheld its price collusion ruling against the IPPs, but reduced the combined penalty to NT$6.01 billion by maintaining the amount that Mai Liao Power Corp, Ever Power IPP Co and Hoping Power Co had to pay at NT$1.81 billion, NT$1.32 billion and NT$610 million respectively, but reducing by between NT$2 million and NT$11 million the fines for the six other firms.
Certainly, these IPPs have the right to appeal the case to the Cabinet again. However, if the Petitions and Appeals Committee were to reject the commission’s decision for a third time, it could convey a message to the public that the government does not want the case to proceed. Moreover, it means that Taipower in the future would be under no pressure to get serious about the terms of electricity purchase contracts it has with IPPs, especially with some of the private firms that are reinvestment units of Taiwan Cogeneration Corp, which is actually a subsidiary of Taipower.
Little wonder, then, that Taipower has struck overly generous purchasing contracts with these IPPs in the past, considering their complicated shareholding relationships — some retired senior Taipower executives are even in high-ranking positions at these IPPs — and the low financial transparency and poor disclosure of information at the state-run utility.
If the commission’s ruling does not prevail this time, it will only encourage the bad corporate habits in state-run companies in terms of bureaucratic corruption and careless management. In addition, it would tell those Taipower veterans at IPPs that they can still do whatever they want and taxpayers will continue to be ripped off. How sad.
After all, it is the lack of competition that is the core problem with Taipower and the nation’s electricity issues. If Taiwanese remain grossly uninformed or even misinformed about the supply and prices of electricity by a state monopoly, and the nation’s power generation and distribution market continues to be held under tight control by Taipower, it seems that controversies over the electricity issue will never abate. Unfortunately, the nation lacks a government that is willing to offer solutions to these issues.
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