Taiwan power may seek approval to increase prices

By Yu-huay Sun Bloomberg

Taiwan Power Co., the island’s biggest electricity generator, may seek government permission to increase tariffs to help reverse earnings loss.

The state-run utility may report a loss of NT$42.5 billion this year, a 15-fold increase from NT$2.9 billion reported in 2006, Lee Chuan-lai, a company media relations officer, said by phone from Taipei yesterday. The company needs to raise tariffs by about 10 percent to break even, Lee said.

The company, which generates about 75 percent of the electricity the island uses and monopolizes transmission, lifted prices by an average 5.8 percent in July, the first increase in 23 years after the government gave its approval. Taiwan Power, known as Taipower, is increasing borrowings to fund power plant construction and grid upgrades as it is unable to pass on rising fuel costs to consumers because of government price controls.

“Taiwan Power needs to raise prices,” Lee said. “It’s been very hard for us.”

The utility expects borrowing, which includes bonds and bank loans, to rise to NT$138 billion in 2007 from an estimated NT$110 billion in 2006, Walter Pan, company finance director, said by phone from Taipei Dec. 22.

The cost of importing liquefied natural gas surged 20 percent last year, according to the energy bureau. Gas-fired generators made up 31 percent of the island’s installed capacity in January, trailing coal’s 33 percent, according to Taipower’s Web site.

LNG, which accounts for more than 90 percent of Taiwan’s gas demand, is gas that is cooled to liquid form so it can be transported by vessels over long distances to markets that aren’t connected by pipelines.