Taipower’s figures need scrutiny

By Jay Fang 方儉  / 

Mon, May 19, 2014 - Page 8

Taiwan Power Co (Taipower) and government officials are behaving like unruly kids, fibbing to their betters and failing to understand the consequences. In their haste to impress upon the public the idea that electricity prices will go up if construction of the Fourth Nuclear Power Plant in New Taipei City’s Gongliao (貢寮) District is not completed, they have been threatening people about inflated bills, hoping to whittle down any troublesome anti-nuclear resistance.

Meanwhile, the legislators charged with supervising state budgets have proven to be useless, sitting by as the government does exactly as it pleases. Even in the summer, when power consumption is higher, the power supply is only at 80 percent of capacity during peak use hours, so there is not even a need to increase prices to restrict use.

Taipower is a state-owned monopoly, so information about its acquisitions, operation, personnel, finances and performance evaluations should all be completely transparent and freely available to the public and so should its costs. If electricity prices are to increase, the company should provide objective and reliable statistics that the public can access.

Last year, US-based electrical power authority Chen Mo-shing (陳謨星) spent a month in Taiwan and accused Taipower of being economical with the truth over its accounts. Taipower is a monopoly provider, has only one product and does not have to pay for inventory storage, so its outlay should be eminently straightforward.

Taipower has been keeping the cost by unit of nuclear power to the lowest in the world and by making sure that nuclear plants are operating at full capacity, other power plants have to be mothballed, which means the company no longer has to pay ancillary service costs for them.

However, as a fixed amount of investment has gone into the power plants, if these plants are not generating electricity the amortized cost — the depreciation of intangibles over time — increases and the electricity that the company does generate needs to compensate for the increased costs accruing from shutting these plants down, and having them sit there not generating electricity. Moreover, Taipower can say what it likes about its reserve margins, because there has been precious little effective monitoring of their figures.

In other countries, power companies employ the concept of Levelized Energy Cost, an analysis of the total cost of the plant — including finances, construction, operation and maintenance, fuel, decommissioning and upgrading — over its entire presumed productive lifetime, generally between 20 and 40 years, to calculate how much each kilowatt hour of electricity can reasonably be expected to cost, in order to ensure fair distribution of costs internally within a power grid and between different power grids.

Typically, these standards are calculated according to 90 percent operating capacity for nuclear power plants, 85 percent for coal-fired or natural gas-fired thermal power stations, 30 percent for natural gas, 35 percent for wind power and 25 percent for photovoltaic generation.

In Taiwan, however, as the government wants to push nuclear power, the nuclear power stations are being operated at close to 100 percent capacity and if all reactors are working correctly, they are rested for only one month in 18 for maintenance purposes.

Taiwan’s nuclear power plants are overused and aging, leading to safety concerns. Last year the European Nuclear Safety Regulators Group nuclear safety stress tests “strongly recommend[ed] further improvements in view of Taiwan’s vulnerability to natural hazards such as earthquakes, flooding, tsunamis and volcanoes,” and restraining bolts in two reactors in the Guosheng Nuclear Power Plant in New Taipei City’s Wanli (萬里) District were found to have cracks in them: This is only the second time such a thing has happened anywhere in the world.

According to the Bureau of Energy’s 2012 report on energy sources, Taiwan has 48.4 gigawatts of total installed capacity of electricity. When producing at full capacity, the country is able to produce 424,000 gigawatt-hours (GWh) of electricity every year, and Taiwan in that year only actually needed to generate 254,000 GWh of electricity, gross.

That means the country is only using 60 percent of its capacity, which is quite a stretch from the international standard of 80 percent from which the reasonable cost of energy is calculated.

The implication of this is that Taiwan has too many power plants, or it is using too little electricity, so the supply exceeds demand and there are too many unused power plants. Imagine a beef noodle restaurant that can sell 100 bowls of noodles a day, will break even at 80, but only actually sells 60 per day. Clearly, in this scenario, it will be running at a loss. Then, to turn things around, the management decides to raise prices, extend the premises, and pay the staff more, together with 4.6 months salary for their year-end bonus. I can tell you now, that store would not survive for long.

If a plant is operating at a lower than 70 percent utilization rate, it will certainly run into trouble. Taipower’s plants are running at a utilization rate of under 60 percent, and its other costs — such as paying for unused personnel, premises and materials — are even more startling.

Taiwan’s nuclear power plants contribute about 40,000 Gwh of electricity every year. If all three operating nuclear plants were shut down, the country would still be able to produce 380,000 GWh of electricity annually. Power from wind, hydroelectric and photovoltaic power plants, which cannot be stored, presently only accounts in total to an inconsequential 9,100 GWh of electricity per year. Since we only use 250,000 GWh of electricity per year, which is only 66 percent of the maximum supply capacity, we can still retire many inefficient coal-fired units.

Legislators should be doing their job properly, and checking over Taipower’s and the Ministry of Economic Affairs’ cost breakdowns, not just trusting them indiscriminately. It was these legislators that reviewed and passed the budgets for Taipower’s plants which are now sitting there not producing anything. Are these legislators going to continue being complicit with this exorbitance?

Jay Fang is chairman of the Green Consumers’ Foundation.

Translated by Paul Cooper