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May 30, 2017

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'Unfair' Taipower deals to be reviewed: MOEA

Ministry of the Economic Affairs (MOEA) Minister Shih Yen-shiang (施顏祥) said yesterday that the MOEA will review Taiwan Power Company's (Taipower, 台灣電力公司) contracts with Individual Power Producers (IPPs).

Former Premier Frank Hsieh (謝長廷) of the Democratic Progressive Party (DPP) said yesterday that Taipower's financial losses were because Taipower bought too much electricity from IPPs after the Kuomintang (KMT) took power in 2008. Suspecting that Taipower cut deals that unfairly benefited the IPPs over the public, DPP legislators vowed to examine carefully the contracts between Taipower and IPPs.

According to Hsieh, when he was the incumbent premier, instead of increasing the electricity price he reduced the legal electricity reserve to 16 percent. After the KMT regained power, however, the reserve was increased to 21.1 percent in 2008, 28.1 percent in 2009, 23.4 percent in 2010, and 20.6 percent in 2011. Any electricity reserve more than 16 percent is not in accordance with the law, said Hsieh.

Hsieh stated that reducing 1 percent of the electricity reserve can decrease costs by NT$10 billion (US$338 million) a year. DPP Legislator Chen Ting-fei (陳亭妃) calculated that Taipower has overspent NT$240 billion over the last three years. Without the excess spending, Taipower would not have suffered the losses it did, meaning the increase of electricity rates is not justifiable, Chen argued.

Taipower Chairman Edward Chen (陳貴明) said that the contracts between Taipower and the IPPs were signed in the early 1990s when the electricity reserve was only 4 percent. Taipower signed contracts spanning 25 years with these companies to provide incentives for private companies to invest. The chairman said that Taipower will consider not renewing these contracts.

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