The Taipei Water Department’s 28.16 percent water price hike is expected to lead to rate increases for an estimated 6.5 million of Taiwan Water Corp’s end users, sources said.
The department supplies an average of about 200,000 tonnes of water daily to Taiwan Water, the public corporation responsible for the nation’s household water supply.
Although contracts signed by the two entities do not permit the department to increase the rate it charges on that supply, “renegotiation of the contracts is a certainty and only a matter of time,” department Commissioner Chen Chin-hsiang (陳錦祥) said.
It is anticipated that a consensus on the details of rate increases would be reached by the end of this year, after the Banciao-Sinjhuang Regional Water Supply Improvement Project II completes its first-stage targets, Chen said.
Taiwan Water purchases water from the department, because its own source was inadequate to meet national demand.
Contracts stipulated that the department is to charge Taiwan Water NT$5.2 per tonne when water volume supplied in a 24-hour period exceeds 300,000 tonnes and NT$5.9 per tonne below that threshold.
However, according to publicly available information, expected progress in the Banciao-Sinjhuang project is to greatly increase the amount of water Taiwan Water purchases from the department. By the end of the year, the maximum tonnage of Taiwan Water’s daily purchases is forecast to increase to 720,000 tonnes. By 2021, the daily maximum is expected to grow to 1.1 million tonnes.
Taiwan Water vice president Lin Yueh (林岳) confirmed that, if the corporation is obliged to purchase water at a greater price from the department, “higher costs will be factored into the [end users’] rate formula.”
Taiwan Water has sustained net losses over several consecutive years and “will have no choice,” but to increase end-user rates, Lin said.
However, proposals to hike rates are “still being discussed in-house,” and due to the change in government, Taiwan Water does not anticipate submitting a revised rate formula to the Ministry of Economic Affairs in the immediate future, he added.
Department Deputy Commissioner Chen Ming-chou (陳明洲) said the department’s 28.16 percent rate hike was modest compared with the increased real costs of water, adding that it intentionally raised prices less than necessary, because it was concerned about the economic impact and public backlash higher prices would have had.
The Feitsui Reservoir (翡翠水庫) had increased the price of water it sold to the department from NT$0.5 to NT$1.37 per tonne, Chen Ming-chou said, adding that according to the department’s accountants, prices would need to be raised to NT$3.47 per tonne to cover the difference.
Losses incurred by the department due to artificially low prices are absorbed by the Taipei City Government, he said, adding that heavy consumers of water actually receive more subsidies than light users.
It would be better if a “user pays” principle were implemented to allow prices to rise to natural levels, he said, adding that the department would review prices every four years to make necessary adjustments.
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