National electricity rates are likely to decline due to the falling cost of international crude oil which has lowered Taiwan Power Co’s (Taipower, 台電) power generation costs, the Ministry of Economic Affairs said yesterday.
“The average oil price — about US$51 per barrel in October last year — has dropped to US$40, hence there is room for Taipower to cut electricity rates,” Bureau of Energy Director-General Lin Chuan-neng (林全能) told a news conference.
Lin said the scale of the rate cuts would be decided by an electricity pricing review committee on March 15, with the new rates taking effect on April 1 and running through October.
The current average rate is NT$2.8852 per kilowatt-hour (kWh), Taipower data showed.
Due to declining fuel costs, Taipower’s net profit reached NT$61.8 billion (US$1.86 billion) last year, exceeding the electricity pricing formula’s “reasonable profit” by NT$34 billion, Lin said.
The electricity rates review committee has been discussing how Taipower should utilize the NT$34 billion, Lin said.
The committee might request the state-run utility share the NT$34 billion with the public by refunding households, Lin said.
However, some members propose setting up a special account which would allow Taipower to absorb future rises in power generation costs without resorting to raising electricity rates, Lin said.
Other members argue that Taipower should invest the money in improving the quality of its power supply, he said.
A final decision regarding the issue is to be made by March 15, he added.
Meanwhile, the ministry plans to propose a revised electricity pricing formula to the legislature in the second half of this year, Lin said.
“The ministry still plans to adjust electricity rates every six months, but hopes to add more factors into the pricing scheme to better reflect Taipower’s cost structure,” he said.
That is because the current pricing scheme excludes Taipower’s non-operational costs from its cost structure, which Lin said is not fair to the company.
As Taipower’s price increase is capped at 3 percent every six months, or 6 percent on an annual basis, Lin said it is also not reasonable that there is no limit to rate drops under the current scheme.
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