Electricity rate adjustments are about taking into consideration the roles of the government, private households and businesses. Everything ranging from the public’s use of electricity, their investment choices and general life satisfaction to the operating strategies of Taiwan Power Co (Taipower) and private enterprises is closely tied to the electricity rate.
For this reason, rate adjustments are a key aspect of the government’s energy policy. However, issues related to rates are not limited to adjusting electricity prices. A more important issue is the reassessment of strategies and rates to ensure energy security.
The most pressing challenge for the government is to develop a cost-effective and pragmatic policy instrument for the nation’s energy consumption, as well as a fair and objective mechanism to review and adjust rates.
Since March last year, the electricity review committee has convened three meetings. At the most recent one in March, the committee lowered the average rate from NT$2.8181 to NT$2.5488 per kilowatt hour. These meetings show that the nation has made a lot of progress in adjusting power rates.
Nonetheless, the committee still needs to ensure that the decisionmaking process is objective, fair and transparent, and that the rate duly reflects power generation costs. Furthermore, it should consider reflecting external power generation costs, in particular the costs required to curb energy-related pollution. To fully achieve the nation’s energy development goals, the government needs sound policy instruments.
Changes to the rates affect government policy and the standard of living. Because of this, an effective and pragmatic energy policy instrument is the government’s key means to achieve its energy goals. Since energy tax regulations were first proposed in 2006, several bills have been discussed and drafted, but all have ended without a conclusion or a consensus.
The first energy tax regulations were not set down until last year, when the Greenhouse Gas Reduction and Management Act (溫室氣體減量及管理法) was passed.
Although there is still a lot of room for discussion over whether an energy tax should be imposed, there is no doubt that the government’s energy policy needs to be implemented through a concrete policy instrument.
Developing a better energy tax scheme will be a key challenge, especially so for the new government taking office on May 20, as it has already announced a goal to develop sources of alternative energy as a replacement for nuclear and coal-fired generation by the year 2025.
With no mature policy instrument readily available, the chance of achieving such a goal seems extremely slim. This highlights the fact that Taiwan urgently needs a better policy instrument to improve its energy situation.
A policy instrument should focus on creating an energy tax system, while the review mechanism for rate adjustments should be fairer, more objective and more transparent.
The government should make good use of the electricity review committee and make sure that plans for rate adjustments are becoming more systematic, transparent and standardized. It should also research and develop more energy policy instruments and continue to promote the energy tax to ensure energy sustainability and provide reasonable electricity prices.
Lin Ta-hui is director of National Cheng Kung University’s Research Center for Energy Technology and Strategy. Chang Kuei-chao is an assistant researcher at the center.
Translated by Tu Yu-an
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