Mon, Oct 17, 2016 - Page 6 News List

EDITORIAL: Liberalizing the energy market

Ensuring a stable supply of electricity and an efficient allocation of the nation’s energy resources are key considerations for the government to sustain growth and seek energy security.

As the issue of power supply involves social equity, market openness and national security, the Democratic Progressive Party (DPP) government’s recent push for amendments to the Electricity Act (電業法), which has seen only minor changes in the past three decades, has attracted public attention, with some expressing admiration for the government’s courage to deal with the complicated law, along with the anticipation of a more liberalized power industry.

However, the Executive Yuan’s policy stance toward the amendments — following a meeting between Premier Lin Chuan (林全) and several DPP legislators last week — might dampen hopes of market liberalization any time soon, because state-run Taiwan Power Co (Taipower) would still have a monopoly over the industry in the foreseeable future.

Some people said the amendments are a great step backward from the proposals the Bureau of Energy drafted a few months ago.

The Ministry of Economic Affairs said the bureau will send a final version of the proposed amendments to the Executive Yuan this week for approval, before submitting it to the Legislative Yuan for further review.

However, according to Cabinet spokesman Hsu Kuo-yung’s (徐國勇) remarks on Thursday, the DPP government would focus on the promotion of “renewable” energy in the first phase of the amendment and is planning to push it through the legislature as quickly as possible.

Hsu said the goal of liberalizing the energy industry would be achieved in the second phase of the amendment, when Taipower would be split into two: a power generation company and an electrical grid company.

Hsu said that the second-phase amendment would come into effect about six years after it is passed by the legislature, which can be interpreted as a sign that there is no prescribed timeframe for the liberalization of the electricity market.

The government is being careful not to push the liberalization of the electricity sector too hard to avoid a confrontation with Taipower employees and opposition parties. It is taking this approach at a time when there is a long list of draft bills that it desperately needs to deal with to prop up its flagging approval ratings.

Also, the DPP and its lawmakers might not want a repeat of the tense situation that arose over draft amendments to the Labor Standards Act (勞動基準法) involving the controversial “one fixed day off and one flexible rest day” in every seven working days.

However, a major course correction is necessary, as the demand for breaking Taipower’s monopoly and welcoming private participants to the energy industry keeps rising, while the idea of separating the industry into three categories — power generation, distribution and sales — becomes more accepted.

A reset of the nation’s energy development policy is long overdue and it cannot happen without pain. The liberalization of the nation’s telecoms market about 10 years ago led to lower prices and improved services.

No matter what its political strategy is, the government must understand that the liberalization of the energy industry would not only provide a solution to the dispute over nuclear energy, but also promote price rationalization and energy efficiency in the long term through free and fair competition, and equal participation.

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