If a company’s overhead for creating products rises, but their prices remain the same, it would eventually shut down.
Taiwan Power Co (Taipower) is the nation’s only electricity provider. If it were to shut down, would people be fine without electricity? Unless people are willing to revert to living in a cave, then the answer is an emphatic “no.”
At first glance, a planned freeze of energy prices looks like a good thing as the cost of living burden would not increase.
However, this is a poisoned chalice. The “poison” is that the public would eventually pick up the bill for Taipower’s losses — unless they want to live without electricity.
There is no such thing as a free lunch.
Taiwan has always had proportionately low residential electricity use, but massive use by companies and industrial consumers.
Taking into consideration that consumption levels vary among users, the Ministry of Economic Affairs’ Electricity Price Review Committee met last month and advocated a bill that would adjust rates based on usage tiers.
Low energy users, who make up 68 percent of all electricity consumers, would only face a 3 percent rate increase, while the rate for the other 32 percent would rise based on the amount of electricity used.
The largest increase for small businesses that use more than 3,001 kilowatt-hours of electricity per year would be 10 percent.
For industrial consumers, their rate increase would be based on their usage, with tiers from 500 million kilowatt-hours to 15 billion kilowatt-hours facing increases of 10 to 25 percent.
The vast majority of large-scale consumers fall within the lowest maximum rate increase of 15 percent.
According to the committee’s proposal, large industrial firms that use a lot of electricity would bear a greater responsibility for electricity production costs, so what would happen if there were a freeze on electricity rate increases?
The large consumers would have the greatest savings. Small-scale consumers would not face rate increases, but their savings would be limited, as Taipower’s losses would be picked up in the form of taxes footed by everyone.
International Energy Agency estimates show that people born in the 1950s generate 350 tonnes of carbon dioxide on average in their lifetime, while people born between 1997 to 2012 generate about 110 tonnes.
However, people born in the 2020s are expected to generate only about 34 tonnes in their lifetime.
It is shameful that those born after 2020 are to be saddled with the burden of the environmental devastation caused by previous generations.
By the same reasoning, if today’s electricity rates do not increase, it would only force greater debt onto tomorrow’s generations.
Moreover, those who use electricity the least would be helping those who use it the most.
Freezing electricity rates is a good option only for those who want to rob the poor to enrich the wealthy, reinforce Taiwan’s wealth gap and make life much harder for young people.
Chen Ping-hei is a professor in National Taiwan University’s Department of Mechanical Engineering. Chiang Ya-chi is a professor in National Taiwan Ocean University’s Department of Ocean Law and Policy.
Translated by Tim Smith
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