The Democratic Progressive Party (DPP) said yesterday that the government’s about-face on raising electricity rates is not the correct solution to state-run Taiwan Power Co’s (Taipower) problems and the party would submit its own proposal to remedy the company’s loss-making performance.
The administration of President Ma Ying-jeou (馬英九) appeared to have taken a step back from its original plan of a one-off electricity price increase by more than 30 percent on May 15, as it hinted at the possibility of a staggered increase to reduce the public’s financial burden and assuage public anger.
The DPP caucus opposed the staggered price increase plan because electricity rates could have remained unchanged if Taipower were better managed, DPP Legislator Pan Men-an (潘孟安) told a press conference yesterday.
A complete review of the power company — which listed its operational loss to date at NT$132 billion (US$4.5 billion) — focusing on its investment decisions, electricity purchasing deals with independent power producers (IPPs) and agreements to buy coal overseas is required before raising rates, he said.
Taipower was accused of charging the IPPs low electricity rates and buying electricity back from those producers at more than the average market rates. It has refused to disclose its agreements with IPPs and foreign energy providers, citing confidentiality.
Citing an example of a uniform agreement provided by Taipower, Pan said the agreement allows for an annual price review of electricity generated by IPPs, as well as cogeneration systems, on Jan. 1 every year.
“Taipower, which spends NT$140 billion on purchasing domestic electricity every year, never conducts annual reviews,” he added.
The findings showed that despite the IPPs signing guaranteed 25-year contracts with Taipower, electricity prices were negotiable and potential scandals could probably be found in those deals, DPP Legislator Lin Chia-lung (林佳龍) said.
The Ma administration’s insistence on raising rates was in contempt of the Legislative Yuan, because the legislature’s Economics Committee had passed a resolution demanding a freeze in electricity prices, DPP Legislator Chen Ting-fei (陳亭妃) said.
Because the government was not interested in reforming Taipower, the DPP legislative caucus would collaborate with the Taiwan Thinktank and submit a reform proposal for the company, she said.
Huang Yu-lin (黃玉霖), a professor at National Chiao Tung University who works as the think tank’s researcher, said the government and Taipower were trying to write off the company’s loss with the one-off price increase, which is expected to rake in about the same amount of money for the company.
“However, that also means Tai-power would enjoy a guaranteed annual profit of more than NT$130 billion every year from now on,” Huang said.
According to the think tank’s calculations, an average price increase of 11 percent — the annual cost increase of Taipower’s fuel purchases — would be able to “stop the company’s bleeding this year,” Huang said.
“Then we’ll talk about how to improve Taipower’s management efficiency,” he added.
The proposal is expected to demand that Taipower discloses its 10-year plan on investment and reserve capacity, as well as the company’s formula for calculating electricity prices and the formula’s legal basis, according to Huang.