When talking about the level at which electricity prices should be set, many people, with the public interest in mind, would say that prices should drop. However, perhaps they should look at the German government’s approach.
Electricity prices are higher in Germany than they are in Taiwan and by quite a long way.
However, it is because of the policy of high electricity prices, coupled with the deregulation of the energy industry, and a system allowing private energy provision, that the public has been encouraged to save energy resources and invest in renewable energy. This has meant that many Germans are following a low-carbon lifestyle and some are even earning income by selling the extra electricity they generate from alternative energy sources.
Many German farmers are selling energy to supplement their incomes, while the high electricity prices have also given companies incentives to research and develop energy-efficient products.
German energy-efficient buildings, cars and domestic electrical goods are all giving the nation’s economy a boost. Far from being adversely affected by the high electricity prices, Germany’s economic growth has been stimulated by the green energy industry.
The drop in electricity prices in Taiwan has come about in the face of the international economic situation, the nation’s economic downturn and OPEC’s refusal to reduce oil output.
The government should set up a mechanism to address this kind of unexpected surpluses and use the additional funds brought by them to not cut prices, but to upgrade energy technologies. It should facilitate the achievement of energy development objectives; improve energy security infrastructure; fund research; invest in social education and allocate funds for the compensation of the victims of energy disasters.
If the authorities must reduce energy prices, it should at least be done in a way to achieve certain policy objectives. At a time when the hope is for everyone to move in the direction of reducing energy consumption, encouraging people to use energy by reducing prices would only make it more difficult to achieve that objective.
Furthermore, if this so-called surprise surplus results from a fall in the price of imported energy, that would suggest the reason behind it is something that is beyond the government’s control.
Therefore, if the government is not to use the extra money on other, more constructive objectives, then it should at least use it to mitigate fluctuations in the price of imported energy.
For example, the money could be placed in an imported energy price stabilization fund, which could be used to subsidize power plants when imported energy prices rise to minimize price fluctuations.
The surplus could also be used to encourage energy conservation, giving more refunds to private people and companies that reduce their energy consumption.
The government should also take this opportunity to step up the promotion of energy conservation, green energy provision and reduction in carbon emissions again by offering refunds, allowing the policy to take people in the desired direction.
Taiwan Power’s surplus should reflect environmental costs, as well as the risks of nuclear power, and be used toward speeding up the introduction of a smart grid, rolling out more energy storage capacity and building the infrastructure for the provision of renewable energy.
This is what the government should be doing, rather than reducing electricity prices just to keep the consumer happy.
Kao Ru-ping is chairperson of the Taiwan Renewable Energy Alliance.
Translated by Paul Cooper
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