萬國法律事務所

On April 30, 2024, the Legislative Yuan passed a resolution proposed by Chinese Nationalist Party (KMT) to freeze electricity rates. In response, the Ministry of Economic Affairs (MOEA) observed that the current electricity price review mechanism is based on a resolution passed by the Legislative Yuan in 2015 that was subsequently enacted into law as Article 49 of the Electricity Act.  While the MOEA respects this latest resolution by Legislative Yuan, it says that the Ministry and Taiwan Power Company (Taipower) must abide by the current electricity price review mechanism in accordance with the Electricity Act.
 
The MOEA pointed out that Article 49 of the Electricity Act and its related subordinate specialized regulations stipulate the mechanism for reviewing and adjusting electricity rates. Accordingly, the MOEA convened the Electricity Rate Review Committee in March of this year as is required bi-annually by law. The Committee decided to set new rates based on energy conservation and carbon reduction considerations. Specifically, those who consume more than 1,000 kWh per month, electricity rates will see rates increased by 10%. In contrast, general household users will see an increase ranging from 3% to 5%, which means that monthly electricity bill will increase by no more than NT$20 (less than US$1). General household users are those who consume no more than 700 kWh. They account for 93% of households in Taiwan.
 
The MOEA stated that the cost of generating electricity remains higher than the new increased rates. Without the adjustment to current electricity rates, Taipower would become financially unstable. By the end of 2023, Taipower’s accumulated losses had reached NT$382.6 billion (approx. US$11.8 billion). If electricity rates had not adjusted, Taipower would have suffered an additional NT$212.4 billion (approx. US$6.55 billion) loss in 2024. This would severely impact Taipower’s ability to ensure a stable power supply and invest in grid resilience.
 
Academic experts believe that the resolution passed by the Legislative Yuan was intended to put political and public pressure on the executive branch. However, since a resolution of the Legislative Yuan is not an amendment to the Electricity Act, the Legislature’s latest opinion is not binding on the Ministry. In addition, academic experts also think that the legislature should provide space for administrative agencies to formulate major policies. Here the administrative agency in question (the Ministry) had a legal basis to act under Article 49 of the Electricity Act. It follows that the administrative agency has the option to take note of the Legislative Yuan’s resolution and not raise electricity rates, or it can raise electricity rates in accordance with existing law. Taipower’s new rates took effect on April 1 of this year.