No Increase in Electricity Rates for Ten Years: A Red Herring
United Daily News Editorial (Taipei, Taiwan, ROC)
March 11, 2016
Executive Summary: When President Ma raised gasoline prices and electricity rates, he
provoked widespread public resentment. The DPP is afraid of making the
same mistake. Electricity rates have a major impact on our livelihood.
They must be handled with care. The declaration that "Electricity rates
will not increase for 10 years" is a red herring, one that could stand
in the way of long-term energy development on Taiwan. Tsai Ing-wen's
energy policy must be pragmatic. She must not fail to see the forest for
Full Text Below:
During Tsai Ing-wen's recent "Tour of Industry", she said that in her estimation “There is no possibility of a major increase [in electricity rates for ten years]”. This is a far cry from ringing campaign declaration that "Electricity rates will not increase for ten years". When questioned, Tsai said she did not blame the media for oversimplifying her electricity rate policy. She assured them that the DPP has a comprehensive electricity rate strategy.
During her presidential campaign, Tsai Ing-wen set forth a number of policy programs. But few rivals challenged them. They were being cautious. Tsai seldom proposes any policy about which she is uncertain. But many challenged Tsai Ing-wen's energy policies. In particular, they challenged her proposal to increase green energy production to 50 billion kWh within ten years. Her promise to “surpass Japan and catch up to Germany” aroused considerable skepticism. Criticisms that her green energy policy would lead to massive increases in electricity rates forced her to promise that "Electricity rates will not increase for ten years".
Tsai has gone from promising that "Electricity rates will not increase for ten years”, to “Electricity rates will not increase by much in ten years”. Clearly her promises were nothing but campaign rhetoric. The issue for her is not preventing rate increases, but appeasing voters. The media quoted Tsai Ing-wen as saying “Electricity rates will not increase for ten years”. She says the media oversimplified her position. But reports that electricity rates would not increase if the DPP won impressed voters. Therefore when Tsai changes her tune, from "no increase" to "no major increase", people naturally reach for their magnifying glasses.
Tsai Ing-wen promised no major electricity rate increases for ten years. She gave three reasons. One. Energy-saving measures will mitigate the need for electricity. Two. Green energy prices are high, but costs will fall in the future. Three. The DPP will amend the "Electrical Power Industry Act" and promote separation of the power grid. This will increase Taipower business efficiency, make electrical power generation more transparent, and prices more reasonable.
None of this will be as easy as Tsai Ing-wen imagines. One. Energy-saving measures may let people use less electricity, but they may not prevent unit cost from rising. Imported energy accounts for as much as 98% of Taiwan's energy capacity. Energy prices on Taiwan may be out of our hands.
Taipower has decided to lower electricity rates this April. It has reduced electricity rates three times over the past year, all because prices for imported coal and natural gas have fallen. Electricity rates can fall repeatedly because nearly 80% of our electricity is generated thermally. Over the past few years, fuel prices have fluctuated greatly. Oil prices could climb to nearly 50 dollars per barrel. They could also drop to less than 30 dollars a barrel. With such drastic price fluctuations, how can the DPP possibly guarantee domestic rates will not rise?
Two. Capital costs for green power generation will fall as the technology matures and market penetration increases. This is a mega trend. But development of green energy on Taiwan is limited by natural conditions. This is something for which the DPP can offer no solution. The northern part of the island will experience electricity shortages when the sun fails to shine. The terrain is unfavorable to development of solar energy. There is no power shortage in winter, but that is the peak season for wind power. Last year, our renewable energy capacity accounted for 7.7% of Taipower's system. But actual Taipower generating capacity was limited to 2.8%. Take "power generation" and "actual scheduling". Renewable energy cannot achieve the same base load power scheduling as nuclear energy and thermal energy.
Tsai Ing-wen proposes to make Taiwan a “nuclear free homeland” by 2025. But given the pace of domestic green energy development, replacing nuclear energy in the short term is impossible. Even Germany and Japan cannot do it. How can Taiwan? Compare possible development routes. Substituting thermal power may be feasible. In the run up to 2019, new units will begin operation in Linkou, Daelim, and other locations. These can compensate for the decommissioning of the Number One Nuclear Plant. But carbon emissions from thermal power will undermine Taiwan's efforts to reduce carbon emissions and air pollution harmful to people's health.
Given current domestic and international energy supply, Taiwan may not endure rate increases or lack electricity in the short term. But energy policy requires three to five year development plans, not short-term speculation. Recently, while examining a hydrogen powered car, Tsai immediately exclaimed, "Hydrogen energy is Taiwan's choice for strategic energy transformation!" In fact, Taiwan has yet to map out its path for denuclearization. Yet Tsai Ing-wen is already talking about developing hydrogen energy. This is like expecting a toddler just learning to walk, to take part in a hundred meter dash. How can anyone believe any of this?
When President Ma raised gasoline prices and electricity rates, he provoked widespread public resentment. The DPP is afraid of making the same mistake. Electricity rates have a major impact on our livelihood. They must be handled with care. The declaration that "Electricity rates will not increase for 10 years" is a red herring, one that could stand in the way of long-term energy development on Taiwan. Tsai Ing-wen's energy policy must be pragmatic. She must not fail to see the forest for the trees.