Amid all the debate and argument about electricity prices, Taiwan Power Co’s (Taipower) announcement that it is finally willing to refund at least NT$750 (US$23.79) per household next year seems trivial, given that the state-run utility is expected to make a hefty profit this year. However, whether the new measure resonates with the public is still unknown.
On Thursday, Minister of Economic Affairs John Deng (鄧振中) said at a meeting of the Economics Committee at the Legislative Yuan that the ministry would roll out an electricity price refund plan by the end of this month, aimed at both households and small businesses.
The rationale behind the refund plan is that Taipower is predicted to make a profit of more than NT$20 billion this year, its first year in the black in many years, and the company intends to give back the NT$9 billion it made through sudden declines in international coal and crude oil costs.
Even though that comes out to only about NT$187.5 per user a year (for a family of four) — or about two lunch boxes as some people have said — the issue over the refund plan is not about the amount of money that would be given back to the public, but rather whether the government can establish a reasonable price mechanism for determining electricity rates, and if Taipower can achieve better output and production efficiency.
Everyone is interested in lower electricity prices, but a more pressing issue for all Taiwanese is that the state-run company still has accumulated losses of NT$208.4 billion, which are to be shared by all taxpayers over a decade or two.
Moreover, most people understand that what led Taipower to propose the refund plan was the plunge in global oil prices in the past six months, which is a result of current economic and geopolitical realities involving the Middle East, the US and Russia. However, external factors aside, will people be able to deduct the refund from their electricity bill next year if little progress is being made in Taipower’s resource management and operational efficiency?
People have long argued that Taipower must work to replace old power plants and become more efficient at generating electricity in the long run, but it comes down to a question of where the money is. If the Chinese Nationalist Party (KMT) had not suffered an unprecedented defeat in the Nov. 29 elections, it would be unlikely that the company, or the economics ministry, would succumb to lawmakers’ requests and agree to share extra profits with the public.
The real issue is that the government’s pricing formulas for both fuel and electricity do not fully reflect the fluctuation of international prices in some key raw materials, nor the management and organizational reforms in the nation’s two big state-owned companies, Taipower and CPC Corp, Taiwan.
The Economics Committee is scheduled to hold a public hearing on Thursday over the new electricity pricing formula, which the ministry intends to adjust once every six months to reflect power generation costs and seasonal fluctuations.
There might be a chance to help reform the utility — which wields a tight monopoly over the market and seems to raise prices purely for its own profit — and contribute to the nation’s long-term energy development.
Working together, lawmakers across party lines should carefully supervise the new pricing formula, because the use of electricity is tied to the pricing of all kinds of goods and consumable products.
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