The Ministry of Economic Affairs (MOEA) has announced it will implement the second stage of a planned two-part hike in electricity rates in October, adjusting prices so that the biggest part of the increase will fall on ‘heavy users’ in the power grid.
The proposed hikes would come almost a year after they were originally scheduled to take effect last December. At that time the MOEA deferred the increase followed a strong wave of protests citing current economic conditions and the effects of a rise in power rates on the economy and the livelihood of the people.
In addition, the MOEA says that rates will be arranged to minimize the effect on smaller users in both the residential and commercial sectors, in accordance with a statement by Premier Jiang Yi-huah that the burden should be borne by those who use the electricity. In both sectors, accounts which average less than 330 kwh of power monthly should see no increase in their power bills, with the increase in billing passed on to heavier users in the system.
In the residential sector this would mean that 67% of accounts or some 7 million households would not be affected by the increase. For commercial accounts, 33% or a third of businesses would see no change, representing approximately 300,000 smaller businesses across the island.
The government’s downplaying of the impact of rate hikes has not kept the opposition from threatening to veto any move to up the rates.
DPP legislative caucus convener Ker Chien-ming noted that the party has voted to block attempted price hikes many times in the past. He said that if the government insists on implementing higher rates and pointed out that Premier Jiang will go to the Legislative Yuan in September to present an annual report. That, he said, will be a critical time “for ruling and opposition parties to attack and defend against each other, and if he insists on raising rates, the opposition will show just how strong it can be."
Lin Hung-chih, Chief Executive of the KMT Central Policy Committee, noted that the premier’s visit to the Legislative Yuan to make an annual report is required by the constitution and that as a guest of the Legislative Yuan he should be treated properly.
Lin also lashed out at the DPP for what he called contradictions in the party’s energy policy. He said the KMT "supports building the Fourth Nuclear Power Plant in order to ensure adequate power supplies, but the DPP is often contradictory. They want to halt construction on number four and deny extension of operating licenses for nuclear power plants one, two and three, then they turn around and say electricity rates should not be raised. It’s all very contradictory."
Lin admitted that the current economic situation is not good, and said that before taking any action on rate hikes, the government should take into consideration the effect of rate increases on inflation and people's lives
The General Accounting Office estimates that implementing the second stage rate will cause the economic growth rate to slow by 0.02 and 0.06 percentage points respectively increase this year and next year. The estimated effect on inflation for this year and next year will be an increase of 0.06 and 0.16 percentage points respectively.
Officials of the Bureau of Energy of MOEA said Tuesday that a program which offers discounts to accounts who lower their power consumption will be extended at least until 2017. A similar program which offered discounts for county and city governments that cut back on consumption has already been canceled, and discount rates for residential users may be tweaked either by decreasing the amount of the discounts or raising the threshold to qualify for discounts.