Electricity Act draft amendments set to transform domestic energy industry

  • Date: 2016-10-18
  • Source: Department of Information Services, Executive Yuan

Minister  without  Portfolio  Chang  Jing-sen  convened  a  meeting  today  to  review  draft  amendments  to  the  Electricity  Act  designed  to  transform  the  domestic  energy  industry,  stating  that  current  plans  call  for  the  Act  to  be  amended  in  two  stages.  

The  first-stage  amendments  focus  on  diversifying  energy  supplies  by  opening  up  the  market  for  renewable  energy.  Goals  include  providing  a  stable  power  supply,  developing  “green”  energy  capabilities,  and  establishing  a  power  transmission  and  distribution  mechanism  that  will  yield  an  “open  access”  power  grid.  The  minister  noted  that  the  power  industry  requires  numerous  regulatory  mechanisms,  and  to  ensure  public  confidence  in  the  nation’s  power  supply,  the  issue  of  traditional  power  transmission  industry  liberalization  will  be  discussed  after  those  mechanisms  are  all  operating  smoothly  and  the  relevant  complementary  measures  are  in  place.  Second-stage  amendments  will  thus  be  launched  only  after  the  first-stage  amendments  are  completed,  and  the  complementary  power  industry  regulatory  and  management  measures  are  well-established.

The  minister  also  said  that  after  the  current  amendments  to  the  Electricity  Act  are  passed,  renewable  energy  firms  jointly  established  by  communities,  water  conservancy  councils,  agricultural  groups,  county  and  city  governments  and  renewable  energy  vendors  will  all  become  part  of  a  localized,  decentralized,  community-based  electric  power  industry.  As  the  current  draft  amendments  impose  regulatory  controls  on  carbon  emissions  by  Taiwan’s  sole  existing  power  utility,  Taiwan  Power  Company  (Taipower),  the  company  may  need  to  initiate  investments  in  renewable  energy,  and  cooperate  with  renewable  energy  firms  to  form  partnerships.  In  the  future,  this  transformation  of  Taipower  and  the  energy  industry  as  a  whole  can  lead  to  a  significant  increase  in  power  supplies  from  diversified  sources.

The  Ministry  of  Economic  Affairs  (MOEA)  stated  that  the  government  will  take  a  step-by-step  approach  to  second-stage  amendments  to  the  Electricity  Act,  adding  that  after  the  first  round  of  amendments  are  passed,  liberalization  of  the  renewable  energy  power  generation  industry  will  be  completed  within  one  to  two-and-a-half  years.  The  relevant  firms  will  then  be  permitted  to  sell  electrical  power  through  wholesale  channels,  “wheeling”  (transmitting  electrical  power  from  one  service  area  to  another),  or  directly  to  end  users.  Although  restrictions  will  also  be  lifted  on  renewable  energy  sales  and  traditional  power  generation  firms,  those  firms  will  only  be  permitted  to  sell  power  to  the  public  power  utilities.  Other  new  measures  will  grant  end  users  the  right  to  select  their  power  provider,  establish  power  industry  regulatory  mechanisms,  and  require  public  power  utilities  to  control  their  carbon  emissions  and  reserve  capacity.

The  MOEA  also  said  that  second-stage  Electricity  Act  amendments  will  allow  traditional  power  generation  facilities  established  after  the  first  round  of  amendments  to  engage  in  wheeling  or  supply  power  directly  to  end  users.  This  will  introduce  competition  back  into  the  market  for  electrical  power,  and  allow  for  the  establishment  of  a  conventional  electrical  power  sales  industry.

Power  generation  is  a  key  link  in  Taiwan’s  energy  supply  chain,  but  the  existing  Electricity  Act  has  prohibited  free  trade  in  renewable  energy  to  meet  end-user  needs  and  hindered  the  industry’s  development,  according  to  the  MOEA.  The  current  round  of  draft  amendments  have  thus  made  bringing  green  energy  into  the  power  generation  market  a  priority,  starting  with  allowing  sales  of  renewable  energy  to  end  users  via  wheeling,  direct  sales,  or  from  renewable  energy  sales  firms.  These  amendments  will  also  remove  past  restrictions  on  renewable  energy  sales,  and  after  the  market  shows  stable  development,  amendments  will  gradually  be  drafted  to  allow  other  sales  methods  for  traditional  energy.

The  MOEA  further  stated  that  the  electrical  power  transmission  and  distribution  industries  will  most  likely  be  overseen  and  operated  by  the  government  to  ensure  fair  allocation  of  and  access  to  electrical  grids,  while  users  will  be  able  to  freely  choose  their  power  provider.  A  regulatory  agency  designated  by  the  central  government’s  competent  authority  will  manage  and  monitor  the  electricity  market,  and  safeguard  the  public’s  right  to  electrical  power  access.  The  government  will  also  stipulate  procedures  for  setting  electricity  prices,  and  establish  a  mechanism  for  price  stabilization  to  reduce  major  fluctuations.

The  current  draft  amendments  will  also  require  that  Taipower  create  two  separate  business  subsidiaries—one  for  power  generation  and  one  for  power  delivery,  distribution  and  sales—with  Taipower  becoming  the  parent  holding  company.

Approximately  40  agencies  and  organizations  attended  today’s  review  meeting,  including  the  Executive  Yuan’s  Office  of  Energy  and  Carbon  Reduction,  the  MOEA,  the  Atomic  Energy  Council,  Taipower  and  the  Taipower  Labor  Union.