Each 10 percent increase in electricity rates will affect businesses’ profits by 3 percent, with rates likely to be raised by more than 30 percent once nuclear power is completely phased out in Taiwan, Credit Suisse Group AG said yesterday.
Taiwan’s three nuclear power plants provide 18.8 percent of the electricity in the nation.
As these plants are scheduled to be decommissioned between 2018 and 2025, the nation will see more reliance on other forms of power generation if there are no new nuclear power plant is in operation during this period, researchers at the Swiss bank said in a report.
On Sunday, the Chinese Nationalist Party (KMT) and President Ma Ying-jeou (馬英九) agreed to halt the construction of the nearly completed Fourth Nuclear Power Plant in New Taipei City’s Gongliao District (貢寮), which is intended to replace one of the three nuclear power plants that will be decommissioned in the coming years.
Credit Suisse researchers Chung Hsu (許忠維) and Michelle Chou (周盈秀) said electricity rates would increase between 10 and 15 percent in 2018, if the nation’s first nuclear power plant were to be shuttered.
The rates could rise further in 2021, when the second nuclear power plant is set to be decommissioned, followed by another equitable increase in 2025 after the last plant shuts down.
“Assuming this cost increase is 100 percent pass-through, we estimate every 10 percent electricity price increase will affect corporate profits by an average of 3 percent,” Hsu and Chou said.
The steel and retail sectors among non-technology industry, alongside printed-circuit board makers among technology industry, are likely to be hit hardest by higher power prices, they added.
In addition, the first round of rate hikes would increase the consumer price index (CPI) by about 0.7 percentage points, given that electricity prices have a 2.2 percent weight in the Directorate-General of Budget, Accounting and Statistics' CPI basket.
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