Delaying does not always lead to the best outcomes
The China Post news staffIn a curious case of national unity, lawmakers across party lines recently called for the government to postpone the second phase of the three-step electricity rate hike scheduled on Oct. 1. If commodity prices increase, they argue that the standard of living will continue to decrease, while Taiwan's exports will further take a hit, negatively affecting the development of the island's industries in the future.
September 1, 2013, 12:02 am TWN
Bear in mind that the country's economy hasn't recovered yet from the June 2012 hike, which accounted for 40 percent of the total planned increase. The second phase involves raising industrial electricity prices by another 11.49 percent, commercial usage rates by 10.04 percent and household prices by 4.57 percent, according to the Ministry of Economic Affairs (MOEA, 經濟部).
But should the government continue to subsidize users who devour a large amount of electricity for all that? Not really. Instead of infusing a real breath of fresh air into the already sluggish domestic economy, our lawmakers should be aware that their decision is not a neutral act. It will alter the choices they make in a predictable direction and fail to achieve a better outcome.
If they delay, they'll move away from the government's default position — curbing power consumption and improving Taipower's (台灣電力公司) managerial problems — and in turn worsening any future outcomes, most notable of which will be an even larger hike next time. That fact needs to be built into their decision, whatever it is they are trying to decide.
Taipower's massive yearly deficit has already totaled more than NT$48.5 billion. Without the price increase, Taipower will not be able to meet the high demand of electricity for Taiwan for the years to come, especially as opposition parties are pressing for stopping the construction of the Fourth Nuclear Power Plant (龍門核能發電廠).
Electricity in Taiwan is less costly compared to other countries because of its use of nuclear power. That's a fact. Even if the government manages to develop alternative energy sources, without nuclear power plants there is little hope for cheap electricity rates in the short- and mid-term.
Building a nuclear power plant may not be in the best interests for Taiwan, especially in light of the Fukushima Dai-ichi Nuclear Power Plant incident of March 11, 2011, but Taiwan hasn't started its transition toward developing alternative energies yet. The budget for the Fourth Nuclear Power Plant's construction has already reached NT$280 billion, not including the NT$53 billion in future costs, and only one reactor has been built so far. That's already a lot of public money squandered.
Moreover, the price of electricity in Taiwan is relatively cheap compared to other countries. Fossil fuels, used for heating, running vehicles or providing power for the industry, are being depleted. In this respect, the planned electricity hike should help improve energy management, which is the key to the future industrial growth.
In Taiwan, the need for energy increases every year. Given that our nation doesn't have access to domestically produced energy at a reasonable price, it makes a lot of sense to foster energy management. As we mentioned before, there is a positive correlation between the rising electricity prices and energy conservation. In the short-term it will hurt everyone to spend more money, but in the long-run it will raise people's awareness about energy consumption and curb waste.
These facts need to be built into our lawmakers' decisions, whoever the supporters are that they are trying to please. Otherwise, the next time they have to address the soaring costs of commodities, they will face an event bigger challenge: making us agree to an even bigger electricity price hike.