Tue, Jul 05, 2005 page10

• Hwang takes helm of Taipower

  STATE-RUN UTILITY The former head of Taiwan Tobacco and Liquor Corp became the chairman of the money-losing electricity monopoly. But can he change things?

  • By Jessie Ho / STAFF REPORTER
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  After successfully brewing new tastes for Taiwan Tobacco and Liquor Corp (台灣菸酒公司), Morgan Hwang (黃營杉) yesterday took over the chairmanship of Taiwan Power Co (Taipower, 台電), charged with turning the once money-making state-owned company around.

  "The easiest way to earn profits, of course, is by hiking electricity fees," Hwang told reporters after the handover ceremony. "But price adjustment is a government policy, and Taipower is merely a planning and executive institution."

  Taiwan imports almost 98 percent of its energy needs, and heavily depends on thermal power fueled by coal. Surging coal prices forced Taipower, which used to be the most profitable state-owned business, to report a deficit this year for the first time.

  For the first five months of this year, Taipower lost NT$4.18 billion (US$131 million) in pre-tax income, compared with a deficit of NT$1.37 billion a year ago. The company, which saw NT$6.9 billion in revenue last year, is expected to report a loss of NT$9 billion this year.

  Increasing fuel costs, however, have not been reflected in prices, said Edward Chen (陳貴明), president of Taipower. In the past 23 years, Taiwan's electricity fees have been cut by 26 percent, in 11 downward adjustments, Chen said. If consumer prices are also considered, current electricity rates are 50 percent lower than they were 23 years ago.

  While admitting that comparatively low electricity fees cause improper use of energy, Hwang said summer was not a good time to raise the rates as users already pay more during the summer.

  The proper time for the company to adjust the rates may have to wait "until the utility fees [paid by consumers] start to slide from the high levels," Hwang said.

  Premier Frank Hsieh (謝長廷) previously said the right time to hike electricity rates was fall or winter.

  Although no specific timeframe or range for hikes has been set so far, the proposed price adjustment is not expected to heavily impact on industries and consumers, Hwang said.

  Another challenge for Hwang comes from the nation's energy supply structure, as the government has vowed to cut carbon dioxide emissions in accordance with the Kyoto Protocol that took effect in February.

  To effectively reduce emissions, one viable solution is to increase the application of nuclear power, but the safety of such a move is a still major concern.

  In response to the issue, Hwang said the company needs to thoroughly weigh the advantages and disadvantages of nuclear power. As the government has purchased and is constructing the Fourth Nuclear Power Plant, Taipower has no reason to let the facility run idle, Hwang said.

  Through enhancing management of the plants and taking care of nuclear waste, Hwang believes the public's fear of nuclear power will be reduced over time.

  Hwang further shrugged off doubts about his qualifications to run a company that requires high expertise in the energy field, saying Taipower already has abundant professionals who specialize in electrical engineering, and that his specialty in management would have a complementary effect and further enhance the company's efficiency.

  Indeed, with so many skilled professionals in hydropower development, Vice Minister of Economic Affairs Steve Chen (陳瑞隆) has suggested that Taipower should invest in Central and South American countries that are developing their own hydropower projects.

  "The investment will help Taipower to make money, as well as to consolidate friendship with our diplomatic allies there," said Chen, who also attended Hwang's swearing-in ceremony yesterday.

  "If these investments were profitable, Taipower would probably not have to raise electricity rates too high," he added.
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