Notes from central Taiwan: Please burst my bubble
This week, the government announced that electricity prices would not be raised for the next six months. Taipower had proposed raising the rates a mere 0.07 percent. The reason given for the rejection of the new rate was that the tiny increase would not cover the administrative costs of making the adjustment. Moreover, Taipower is finally making money again after five years of no profits.
Those of us who from time to time pay attention to the government’s decisions to subsidize utility prices were a bit bemused by this strange logic. Surely, it’s reasonable to suggest that if the rate hike were too low, it can be increased. Higher electricity prices would likely be very good for the nation, though consumers (read: voters) would howl.
However, the committee in charge decided to wait until September to see the effects of adjustments to Taiwan’s power generation structure. Roughly 300 firms, comprising nearly half the nation’s electricity demand, are under government mandates to increase their renewable power generation.
SUBSIDY BUBBLE
And so, once again, the government declined to let Taiwan’s consumers leave their bubble of low prices.
Decades of subsidized prices, together with a total lack of government leadership on conservation — Wait. Suddenly I’m so confused. What public good am I talking about? Low water prices? Too many housing units? Low assessed tax value of homes? Too many roads? Too many universities? Low prices for staple agricultural goods? Too little spending on the military? Low overall tax collection from the economy? Low taxes on the rich?
It seems like everywhere you look there’s a subsidy bubble, with its own population of bubble boys, all in-moolah compromised, all interlinked, a mutually reinforcing circle of retrogressive handouts.
The electricity bubble is sustained by an “electricity iron triangle” of the Democratic Progressive Party (DPP), Taipower’s labor unions, and environmental NGOs, according to a recent paper from Huang Chi-lun (黃寄倫) and Chen Rung-yi (陳蓉怡). While these groups support renewables, none advocate for fundamental change.
When the DPP came to power after the 2016 election, it set about reorganizing the power company. Originally it planned to break up Taipower into four organizations but eventually it settled on two. When the DPP realized it could appoint the leaders of these companies, it became reluctant to engage in privatization as it had originally planned.
Hung and Chen argue that DPP policy is constrained by its Ministers without Portfolio, who often make important decisions but are not subject to legislative interpellation.
The DPP also created a new cabinet-level body, the Office of Energy and Carbon Reduction. This further slowed things down, exacerbated by the traditional antipathy of the bureaucracy towards the DPP.