Fuel prices are rising around the world. But because authorities in Taiwan set the price of electricity, the government has been facing months of losses. On Monday, a committee met to adjust energy fees in an increasingly volatile international economy.
Summer has arrived in Taiwan, and with their ACs switched on, people are using more electricity. Tariffs in Taiwan are set by regulators. That means that as fuel prices rise around the world, Taiwan’s national utility has to pay the difference.
On Monday, the electricity price review committee announced an 8.4% average price increase. The adjustment won’t affect households and small businesses, or essential industries like agriculture. Instead, it is mostly aimed at large enterprises.
But some experts don’t see the proposal as an appropriate response to a changing energy market.
Economist Chen Chung-Shun says most countries no longer regulate the price of electricity, but rather let the market decide rates.
This moment could also be a sign of things to come during Taiwan’s green transition. The country plans for 50% of its energy to come from natural gas by 2025 on the way to reaching net-zero emissions by 2050.
Chen says as Taiwan imports more natural gas to meet its green transition goals, prices will naturally rise.
For now, officials are trying to balance geopolitics and international inflation.
The committee that reviews electricity prices is made up of representatives from the government, industry and academia. The 8% price increase proposal was just one of many.
Monday’s price hike won’t affect everyone, but experts say Taiwan’s energy transition means more rises are sure to come.