Taiwan Power Co (Taipower), the state-owned electricity utility, is facing a significant increase in fuel costs due to ongoing tensions in the Middle East. If natural gas prices remain high, the company anticipates its fuel expenses could rise by over NT$160 billion (approximately US$4.92 billion) this year. The conflict involving the United States, Israel, and Iran, which began in late February, has already led to a more than 70 percent increase in natural gas prices for the power sector.
Between March and August, this surge in fuel prices added approximately NT$71.1 billion to Taipower’s expenses. The utility has warned that these rising costs could further increase its accumulated losses by NT$70 billion, bringing the total to around NT$420 billion. Taipower attributes its financial difficulties to the costly import of fuel, electricity rates that remain below operating costs, and significant interest payments on infrastructure-related borrowing.
The company currently holds about NT$1.85 trillion in outstanding borrowing for infrastructure projects, with annual interest expenses expected to reach NT$30 billion. In response to its growing financial challenges, Taipower is seeking government support through a proposed NT$71.1 billion supplemental budget, which is pending legislative review.
Despite the mounting financial pressure, electricity rates have remained unchanged since September last year, when a modest increase of 0.71 percent was enacted. The government has been reluctant to raise rates further in recent reviews, aiming to avoid additional pressure on consumer prices. However, Taipower has proposed a 12.83 percent increase in electricity rates, citing the need to address rising fuel costs and financial strain. The government is scheduled to review electricity pricing again in December.
This situation underscores the impact of geopolitical tensions in the Middle East on global energy markets and highlights the challenges facing Taiwan as it works to maintain stable electricity prices amid escalating energy import costs.