TAIPEI (CNA) — The Ministry of Economic Affairs (MOEA) decided on March 18 to keep Taiwan’s basic electricity rate unchanged at NT$2.6253 (US$0.085) per kilowatt-hour (kWh).
The decision was made during a meeting convened by the Electricity Tariff Review Committee under the MOEA.
The committee reviews and proposes possible adjustments to electricity rates twice a year, and the ministry generally follows its recommendations.
In March 2018, the committee decided on a 3 percent hike to take effect beginning April 1, representing the first adjustment of power rates since April 2016.
Taiwan Power Co. (Taipower) has estimated it lost NT$14 billion from its electricity business in 2018 and another NT$10 billion in the first two months of 2019 alone, suggesting the possibility of a price hike to boost the utility’s revenues.
The committee determined, however, that long-term fuel costs were on the decline and recommended to keep rates unchanged at NT$2.6253 per kWh to avoid a possible surge in commodity prices that could have resulted from a short-term price hike, the ministry said.
According to the ministry, Taipower’s projections for average crude oil and coal prices for 2019 of US$65 per barrel and US$85 per ton, respectively, are higher than projection1s by international organizations, meaning its costs will likely be lower than projected over time.
Instead, the committee resolved to provide Taipower with NT$36.4 billion in subsidies to stabilize power prices and cover the state-run utility’s losses.
Election considerations may also have factored into the decision.
Taiwan’s government, controlled by the Democratic Progressive Party, faces a tough battle for re-election in early 2020, leaving little appetite for raising electricity prices this year even if justified by Taipower losses.
Yet projections suggest Taiwan’s relatively low electricity rates will likely increase over time.
Economics Minister Shen Jong-chin (沈榮津) said on March 4 that with power consumption in Taiwan growing nearly 2 percent annually from 2018 to 2025, electricity prices could increase as much as 29 percent to NT$3.39 per kWh by 2025 even if fuel prices remain stable.
By Liao Yu-yang and Elizabeth Hsu