April 17th 2008
The China Post news staff
TAIPEI, Taiwan -- State-run Taiwan Power Co. (Taipower) would be forced to shut down its operations in 2010 if domestic electricity rates see no price hike within the next few months, a top Taipower executive warned yesterday.
Chairman Chen Kuei-ming of Taipower issued the warning at a budget screening session held by the economics and energy committee of the Legislative Yuan.
During the session, lawmakers voiced concerns over when Taipower will raise its electricity rates.
Lawmaker Lin Chang-min of the opposition Kuomintang said there are many factors leading to the operating losses of Taipower, including spiraling fuel costs, inappropriate suspension of the construction of the No. 4 nuclear plant during the initial years of Democratic Progressive Party (DPP) rule, and interest payments for investments in Honduras.
Meanwhile, Lawmaker Lee Chun-yi of the DPP said he opposed hiking domestic power rates before the new government takes office on May 20. Lee said adjusting the power rates is a major government policy, and should therefore be up to the new government to make the final decision.
In response, Chen said that if the state-run CPC Corp. Taiwan decides not to hike its oil prices, then Taipower would suffer operating losses of NT$130 billion to NT$150 billion a year.
Chen continued that if CPC raises its oil prices and Taipower still keeps power rates unchanged, then the company would witness larger annual operating losses of NT$200 billion. In this case, Taipower's capitalization would be undermined in 2009, and the company would be forced to close its operations in 2010.
Chen said if the new government decides to raise oil prices on June 1, then Taipower had better follow suit one month later. And in order to make ends meet, he stressed, electricity rates should be hiked by at least 50 percent.
But in order to prevent the rate hike from affecting the livelihood of local people, Chen suggested that the 50 percent hike can be carried out in two stages, with 30 percent in the first stage and 20 percent in the second stage.
Based on the average rate of NT$2.15 for one kilowatt per hour recorded in 2007, the 30 percent hike would translate into an increase of NT$0.65 per kilowatt an hour. The new rate would reach NT$2.8 per kilowatt an hour.
In related news, the Ministry of Economic Affairs and the Ministry of National Defense have reached a consensus that the preferential power rates for military servicemen and their family members would be fully scrapped in three years. Based on the agreement, starting 2009, one third of the total power rate reduction for military servicemen and family members will be canceled per year. Accordingly, the preferential rates would be totally scrapped in 2012.
The move is designed to reduce the operating losses of Taipower, according to Vice Economics Minister Hsieh Fa-ta.
Hsieh said that under the preferential power rate scheme, military servicemen and their family members can enjoy a 50 percent discount for their power rates if the monthly power consumption remains under 500 kilowatts per hour, followed by a 30 percent discount for consumption of 501 to 1,000 kilowatts per hour.
The discounts have made Taipower's total electricity revenues shrink by NT$640 million a year.
Source: http://www.chinapost.com.tw/business/asia/%20taiwan/2008/04/17/152247/Taipower-may.htm
The China Post news staff
TAIPEI, Taiwan -- State-run Taiwan Power Co. (Taipower) would be forced to shut down its operations in 2010 if domestic electricity rates see no price hike within the next few months, a top Taipower executive warned yesterday.
Chairman Chen Kuei-ming of Taipower issued the warning at a budget screening session held by the economics and energy committee of the Legislative Yuan.
During the session, lawmakers voiced concerns over when Taipower will raise its electricity rates.
Lawmaker Lin Chang-min of the opposition Kuomintang said there are many factors leading to the operating losses of Taipower, including spiraling fuel costs, inappropriate suspension of the construction of the No. 4 nuclear plant during the initial years of Democratic Progressive Party (DPP) rule, and interest payments for investments in Honduras.
Meanwhile, Lawmaker Lee Chun-yi of the DPP said he opposed hiking domestic power rates before the new government takes office on May 20. Lee said adjusting the power rates is a major government policy, and should therefore be up to the new government to make the final decision.
In response, Chen said that if the state-run CPC Corp. Taiwan decides not to hike its oil prices, then Taipower would suffer operating losses of NT$130 billion to NT$150 billion a year.
Chen continued that if CPC raises its oil prices and Taipower still keeps power rates unchanged, then the company would witness larger annual operating losses of NT$200 billion. In this case, Taipower's capitalization would be undermined in 2009, and the company would be forced to close its operations in 2010.
Chen said if the new government decides to raise oil prices on June 1, then Taipower had better follow suit one month later. And in order to make ends meet, he stressed, electricity rates should be hiked by at least 50 percent.
But in order to prevent the rate hike from affecting the livelihood of local people, Chen suggested that the 50 percent hike can be carried out in two stages, with 30 percent in the first stage and 20 percent in the second stage.
Based on the average rate of NT$2.15 for one kilowatt per hour recorded in 2007, the 30 percent hike would translate into an increase of NT$0.65 per kilowatt an hour. The new rate would reach NT$2.8 per kilowatt an hour.
In related news, the Ministry of Economic Affairs and the Ministry of National Defense have reached a consensus that the preferential power rates for military servicemen and their family members would be fully scrapped in three years. Based on the agreement, starting 2009, one third of the total power rate reduction for military servicemen and family members will be canceled per year. Accordingly, the preferential rates would be totally scrapped in 2012.
The move is designed to reduce the operating losses of Taipower, according to Vice Economics Minister Hsieh Fa-ta.
Hsieh said that under the preferential power rate scheme, military servicemen and their family members can enjoy a 50 percent discount for their power rates if the monthly power consumption remains under 500 kilowatts per hour, followed by a 30 percent discount for consumption of 501 to 1,000 kilowatts per hour.
The discounts have made Taipower's total electricity revenues shrink by NT$640 million a year.
Source: http://www.chinapost.com.tw/business/asia/%20taiwan/2008/04/17/152247/Taipower-may.htm
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