Wed, Jul 03, 2013 - Page 1 News List

Taipower’s subsidy cut plan hits a wall

BENEFIT:The state utility said the proposal was aimed at helping it recover after posting billions in losses from years of supporting the government’s energy policy

By Helen Ku  /  Staff reporter

Taiwan Power Co’s (Taipower, 台電) plan to stop subsidizing public institutions’ electricity costs from next year has been put in the spotlight after the Bureau of Energy yesterday said it would review the lossmaking state-run utility’s proposal.

The bureau reacted after the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) yesterday reported on Taipower’s plan to halt a subsidy program aimed at helping schools, local water resource agencies, town halls, social welfare organizations, Taipei Rapid Transit Corp (TRTC, 台北捷運) and Kaohsiung Rapid Transit Corp (KRTC, 高雄捷運) save up to NT$7 billion (US$233.37 million) in electricity costs every year.

On June 17, Taipower posted a notice about the proposed cuts, but did not make a formal announcement, the Liberty Times said, adding that if no one raised any objections to the proposal within two weeks, it would have taken effect.

“The proposal was made based on the Electricity Act (電業法), which was revised last year,” Bureau of Energy Deputy Director-General Wang Yunn-ming (王運銘) said by telephone yesterday.

“By virtue of the act, Taipower no longer has to subsidize public institutions because its cost of generating electricity surpassed its electricity selling price last year, which caused the company to post huge losses,” Wang added.

Wang said Taipower’s electricity generating cost was NT$3.04 per kilowatt last year, but its selling price averaged only NT$2.72.

The Electricity Act states that Taipower should offer an 85 percent discount to state-run Taiwan Water Corp (台灣自來水), TRTC and KRTC for their power usage. However, the act also provides that Taipower can charge public institutions full price because it states that Taipower’s electricity selling price should not be lower than its cost.

Given that the Taipei City Government’s Hydraulic Engineering Office of its Public Works Department had expressed an objection to Taipower’s proposal within the 14-day period, the bureau needs to reassess the proposal’s feasibility, Wang said.

According to Taipower’s latest financial statements posted on its Web site, its accumulated losses had amounted to NT$222.7 billion as of the end of May, compared with losses of NT$180 billion in the same period last year.

Taipower spokesman Roger Lee (李鴻洲) said by telephone that the state utility had borne enough of the burden from the government’s electricity price-stabilization policies over the past years, and it would be fairer to the company if public institutions could start using their own budget to pay their bills.

“Industrial users’ electricity buying costs are cheaper than that for most users. Taipower clearly shields industrial groups, but not minorities,” the Liberty Times quoted Consumers’ Foundation chairman Mark Chang (張智剛) as saying.

Chang said Taipower’s move might have a serious impact on the nation’s economy and education because schools would have to reduce their power usage, which could affect students’ learning environment.

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