Taiwan Power Co (Taipower) is facing significant financial strain due to rising natural gas prices triggered by Middle East tensions. The state-owned utility reported that its fuel costs could be NT$160 billion (US$4.92 billion) higher this year compared to pre-conflict levels if current natural gas prices persist. Taipower Department of Accounting director-general Tang Hui-lien highlighted the impact during a recent briefing, emphasizing the need for legislative support for a NT$71.1 billion supplemental budget to mitigate growing losses.
Since the conflict began in late February with US and Israeli strikes on Iran, natural gas prices for the power sector have surged by over 70 percent. This increase has already added NT$71.1 billion to Taipower’s fuel costs from March through August. The company anticipates that higher fuel costs will contribute an additional NT$70 billion to its accumulated losses this year, bringing the total to NT$420 billion, nearly matching the record NT$421.1 billion loss recorded at the end of 2024.
Taipower attributes its financial difficulties to a combination of high fuel costs, below-cost electricity rates, and the interest burden from NT$1.85 trillion in borrowing for infrastructure projects. The company’s interest expenses are expected to reach NT$30 billion this year. Despite these challenges, Taipower has not raised electricity rates since September last year, when a 0.71 percent increase was implemented to avoid affecting consumer prices. The government has postponed rate adjustments scheduled for March and last month, with another review planned for December.
At last month’s meeting, Taipower proposed a 12.83 percent rate increase to address rising fuel costs. The company’s executives have called for support to help manage the financial strain caused by the ongoing geopolitical tensions and their impact on energy prices.