The Ministry of Economic Affairs yesterday unexpectedly kept electricity rates unchanged amid concerns that global tariff hikes and geopolitical tensions have been creating economic uncertainty and price instability.
The ministry would instead continue to seek to have a NT$100 billion (US$3.02 billion) subsidy reinstalled by the legislature to help Taiwan Power Co (Taipower, 台電) stay afloat, Deputy Minister Lai Chien-hsin (賴建信) said.
“Members of the electricity price review committee did not talk much about rate adjustments, but focused their attention on the volatile international economic picture,” Lai told a media briefing that was delayed by one hour.
Photo: CNA
The decision came as a surprise, as the ministry had earlier hinted at an increase of 6 to 8 percent for different users, in line with growing international fuel costs.
US President Donald Trump on Wednesday announced a 25 percent tariff on imported vehicles starting on Thursday next week. He has also pledged to announce on Wednesday next week more extensive tariffs to address US trade imbalances with the rest of the world.
Tariff hikes would drive up production costs and inflationary pressure, while slowing the global economy, Lai said, adding that Taiwan would not emerge unaffected given its export-reliant economy.
The electricity rate freeze would cause NT$50 billion in losses for Taipower this year, he said, adding that the state-owned utility had posted cumulative losses of NT$422.9 billion in December last year.
The company has been operating at a loss to support the government’s price stabilizing efforts, he said.
Electricity price hikes have consistently fueled inflationary expectations and last year prompted the central bank to raise interest rates in March to subdue such expectations.
The monetary policymaker last week refrained from further raising interest rates on concerns that Trump’s tariff threats have already weakened consumer confidence and cast a shadow over the global economy.
The TAIEX plummeted 5.07 percent this month while the local currency depreciated against the US dollar, official data showed, as foreign portfolio managers slashed their holdings in emerging markets, including the local bourse.
Lai said it is unfair to blame Taipower for incurring losses, as the company has limited electricity price hikes to industrial and commercial users, while leaving prices for households largely unchanged to tame inflation.
That is why domestic electricity prices rose moderately relative to the steep hikes in South Korea and European countries after Russia invaded Ukraine in 2022, Taipower president Wang Yao-ting (王耀庭) said.
The ministry would ask Taipower to improve its financial standing through belt-tightening measures, while it continues to negotiate with the legislature, Lai said.
The deputy minister dismissed speculation that Taipower’s losses are related to the nation’s policy of retiring nuclear power and increasing the ratio of renewable energy sources.
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