Committee urges Taipower to review power repurchases, coal procurement

By Camaron Kao ,The China Post

Economic Minister Shih Yen-shiang (施顏祥) yesterday convened the second meeting of a committee aimed at improving the efficiency of state-run businesses and urged the Taiwan Power Company (Taipower, 台灣電力公司) to review power its repurchasing and coal procurement practices. According to the minister, prices for repurchasing electricity from independent power producers (IPPs) and combined heat and power (CHP) plants must be adjusted. State-Owned Enterprise Commission CEO Liu Ming-chung (劉明忠) stated that Taipower will spend a week reviewing contracts with IPPs and seek legal advise.

Taipower has signed 25-year contracts with IPPs, which offer IPPs more than 15 percent of the rate of return and are deemed unfavorable to Taipower and the government. According to Taipower, the firm will try to renegotiate with IPPs to reduce the rate of return to 10 percent. The interest rate when these contracts were signed was 6 to 7 percent, while the current interest rate is 2 to 3 percent, according to a Taipower department leader Tsai Chih-meng. “We believe we can bargain with IPPs in terms of the interest rate under the current” conditions, he said. Tsai said that the company will negotiate with IPPs that Taipower has already signed deals with and try to exert pressure on other IPPs. As for CHP plants, Shih ordered the Bureau of Energy (BOE) to amend its policy regarding the repurchasing of electricity. These plants usually buy electricity from Taipower during off-peak hours and sell their electricity to Taipower during peak hours, when electricity prices are higher. Liu said that the BOE will consider setting a new price for repurchasing electricity from CHP plants. In response to criticism that Taipower signed long-term contracts to procure coal at a higher price, the CEO stated that the company will fully utilize the 20-percent options specified in contracts and closely observe the coal price on the global market. The power supplier also promised that the company will raise its earnings target for the year from NT$250 million (US$8.33 million) to NT$270 million (US$9 million). Shih said that he will consider holding meetings more often and try to report to the public before the end of June. President Ma Ying-jeou yesterday urged all citizens to endure any hardships posed by the price hikes, saying he will, in return, reform national enterprises. He promised that the government will achieve this goal as soon as possible.

Lack of Long-term Plan Commenting on the meeting, Consumers’ Foundation Chairperson Joann Su (蘇錦霞) stated that members of the committee brought up many important points but there is no long-term plan. According to Su, committee members can provide as many suggestions as possible but it is up to Taipower to implement them.