Taiwan Braces for Potential Electricity Rate Hike: Impact and Implications

Government to Review Taipower's Proposal Amidst Economic Considerations

Taiwan is facing a potential increase in electricity rates, as state-owned Taiwan Power Co. (Taipower) seeks government approval for an average hike of nearly 6 percent. This move aims to address the company's substantial financial losses and ensure its long-term operational stability.

A crucial power rate assessment review meeting, led by the Ministry of Economic Affairs, is scheduled to determine the fate of Taipower's proposal. The company has accumulated significant losses, totaling NT$422.9 billion (approximately US$14.97 billion), and is seeking to generate an additional NT$50 billion in revenue this year to mitigate further financial strain.

The proposed rate adjustments outline varying impacts across different consumer segments. Households and small businesses consuming less than 330 kilowatt-hours (kWh) per month could experience rate increases ranging from 11 to 33 percent. Those exceeding this consumption threshold would face a maximum 10 percent increase, reflecting a progressive tariff structure. The industrial sector is expected to see a more modest adjustment.

These measures, if approved, would collectively lead to the aforementioned average tariff hike of nearly 6 percent. The rationale behind the proposal stems partly from the Legislative Yuan's budget cuts, including subsidies originally intended for Taipower. Government officials have stressed the importance of considering the potential impact on inflation when making the final decision.

Recent economic data shows Taiwan's consumer price index (CPI) growing, and the government is keen on keeping inflation under control. The current rate hikes aim to align electricity prices more closely with Taipower's actual costs. It's estimated that the proposed changes, if approved, would affect approximately 13.60 million households and 910,000 small businesses.

Despite the anticipated rate increases, Taipower anticipates it will be unlikely to achieve a breakeven point this year, owing to the continued considerations of inflation and the imperative to safeguard the competitiveness of Taiwan's industries.