A large percentage of Taiwan Power Co’s (Taipower) losses were the result of accumulated subsidies for the provision of electricity to outlying islands over the past decade that were supposed to be paid by the central government, the People First Party (PFP) legislative caucus said yesterday.
While most people, amid a recent public outcry over electricity price increases scheduled to take effect on May 15, focused on Taipower’s power-purchase mechanism or employee benefits in their criticisms, PFP caucus convener Thomas Lee (李桐豪) told a press conference that the government’s attitude was what mattered most.
Noting Taipower’s claim that it has now accumulated losses of NT$132.2 billion (US$4.48 billion) from 2008 through the end of February, Lee said a closer look at the cause of the deficit suggested a large proportion of its shortfall was due to payments owed by the government.
According to Lee, the Ministry of Economic Affairs had requested Taipower to assist in the development of the outlying islands by subsidizing electricity fees there. However, the ministry did not follow the regulations of the Offshore Islands Development Act (離島建設條例) and the Regulations Governing Offshore Power Supply Operating Loss Subsidies (離島供電營運虧損補助辦法) and allot funds to Taipower. As a result, Taipower had to absorb the cost of NT$52.418 billion, between 1998 and last year, by itself, Lee said.
In addition, Lee said the Water Resources Agency should have shared construction costs of about NT$941 million in the development of Miaoli County’s Li Yu Tan Reservoir and Shihlin Hydropower Project, but the cost was covered by Taipower.
The amount owed by the central government from the two projects already amounts to NT$53.359 billion, accounting for about 40 percent of Taipower’s total deficit, Lee said.
In other words, the government bilked subsidies and left it to Taipower to absorb the costs, which were inevitably dumped on the public, he said.
“This kind of government is no different from a gangster,” Lee added.
Lee said that according to Taipower’s electricity price rationalization scheme, households that consume between 120 kilowatt-hours (kWh) and 330kWh a month would be charged an additional amount of about NT$87 a month, boosting the company’s annual revenue to NT$4.5 billion.
Nevertheless, the annual subsidy for electricity to the outlying islands costs about NT$4 billion to NT$5 billion each year, so if the government paid the funds every year, the electricity rate for households that consume less than 330kWh a month would not need to rise, Lee said.
Lee urged the ministry to immediately allocate funding to make up for Taipower’s losses.
Lee also criticized Taipower’s excessive increase of power rates.
Lee said it would take about eight years for the state-run utility to make up for the current deficit. On that premise, the increase should only be about NT$0.285 per kilowatt-hour at most, equaling to about an 11 percent rate increase, he said.
Instead, the power rate increases averaged above 14 percent, with the highest increase about 40 percent, Lee said, suggesting that Taipower would earn NT$17.8 billion in profit next year under such increased rates.
“The practice is like creating excess profit by simply bullying the people,” he said.