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Power Price Hike Is Delayed by Taiwan Government

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Core prompt: Taiwan government delays power price hike Bryan Chuang,Taipei;Steve Shen,DIGITIMES [Tuesday 18 September 2012]Taiwan's government has deci

Taiwan government delays power price hike Bryan Chuang,Taipei;Steve Shen,DIGITIMES [Tuesday 18 September 2012]Taiwan's government has decided to delay a planned electricity rate hike originally set to take place on December 10,2012 until October 1,2013.

Under mounting pressure from the public,Taiwan's premier,Sean Chen,has also instructed the Ministry of Economic Affairs(MOEA)to reevaluate its electricity adjustment policy with an aim to establish a long-term development strategy and improve management efficiency of the state-run Taiwan Power Company(Taipower),rather than just hiking prices to reduce losses.

In order to offset heavy losses at Taipower,the MOEA announced in May a three-phase electricity rate adjustment plan.The first stage of the price hikes already took place on June 10,under which household electricity prices were raised by 16.9%,commercial rates by 30%and industry usage rates by 35%.

The postponement of the second-stage rate hikes comes after the US Federal Reserve initiated recently its third round of quantitative easing(QE3)monetary policy.The QE3 is believed to trigger a further appreciation of the Taiwan currency that will undermine the competitiveness as well as the profitability of local export-oriented industries,which have seen their exports affected by rampant debt crisis in Europe.

In response to the government's decision,Taipower said that the losses it incurred in recent years resulted mainly from the government's regulated tariff as well as electricity subsidy policies,making it unable to reasonably reflect production costs.

Despite a net profit of NT$3.9 billion(US$132.65 million)generated in August,Taipower expects to incur losses of NT$16.2 billion during the September-December period and total losses of NT$76.8 billion for all of 2012,said the company.

 

 
 
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