Taiwan Power Co (Taipower), the island’s state-owned electricity utility, is facing an increase in fuel costs that could surpass NT$160 billion (approximately US$4.92 billion) this year due to elevated natural gas prices, exacerbated by ongoing tensions in the Middle East. The company reports that since the conflict involving the United States, Israel, and Iran erupted in late February, natural gas prices for the power sector have surged by over 70 percent.
Between March and August, these rising prices have already added around NT$71.1 billion to Taipower’s fuel expenses. The utility warns that the continued increase in fuel costs could further inflate its accumulated losses by an additional NT$70 billion, bringing the total to about NT$420 billion. These financial strains are attributed to costly fuel imports, electricity rates that fail to cover operating costs, and the interest payments on substantial infrastructure-related borrowing.
Currently, Taipower’s borrowing for infrastructure projects stands at approximately NT$1.85 trillion, with annual interest expenses projected to reach NT$30 billion. To mitigate financial losses, the utility is seeking government support through a proposed NT$71.1 billion supplemental budget, which is pending legislative review.
Despite these challenges, electricity rates have remained unchanged since September last year, following a modest 0.71 percent increase. The government has refrained from raising rates in recent reviews to avoid further pressure on consumer prices. However, Taipower has proposed a 12.83 percent increase in electricity rates, citing the need to manage rising fuel expenses and financial pressures. The government is scheduled to reassess electricity pricing in December.
This situation underscores the broader impact of Middle East tensions on global energy markets and highlights the difficulties Taiwan faces in maintaining stable electricity prices amidst climbing energy import costs.