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.