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Ted Chen

The China Post

Publication Date : 14-03-2013

Taiwan's Fair Trade Commission (FTC) yesterday levied fines totaling NT$6.32 billion (US$212.6 million) against nine independent power producers (IPP), on charges of having gained illegal profits.

The regulator's ruling represents the highest fines to be levied since amendments completed last year allowed it to exact fines as high as 10 per cent of an offender's annual revenue, instead of the previous maximum of NT$25 million.

The strictest standards were enforced in the ruling, said the FTC.

Fines are required to be paid within 15 days, with installment payment plans available.

The fines follow an investigation into the nine IPPs' demand that Taipower increase the contracted price in its energy purchasing scheme, and their subsequent refusal to appeals of price reduction, according to reports.

As a result, Taipower was compelled to bear extra losses nearing NT$19.4 billion as of the end of 2012, while the nine IPPs accumulated illegal profits of NT$5.9 billion, according to the FTC's investigation.

The FTC explained that the energy purchase scheme between Taipower and IPPs comprises two components: one based on capacity and one based on the amount of energy supplied. The capacity component compensates for the costs of operation and maintenance, in addition to interest rate-related costs. The second component compensates for the costs of fuel consumption in energy generation.

According to the FTC's investigation, the nine IPPs were excessively compensated for providing energy, as they did not lower their prices to fully reflect waning market interest rates that resulted in significantly reduced interest rate-related costs.

The FTC also found evidence of collusion between the IPPs in their coinciding rejections of Taipower appeals to renegotiate energy prices during meetings between August 2008 and October 2012.

However, several IPPs' fines were reduced according to their willingness to cooperate with policy stipulations, according to reports. One IPP had its fines reduced by two-thirds, while three other IPPs' fines were reduced by one-third, based on their willingness to cooperate with policy guidelines.

Six IPPs have since expressed consent to renegotiate their contracts with Taipower, and continue the energy-purchase scheme with new terms, according to reports.

The Mai-Liao Power Plant led the nine IPPs in fines with NT$1.85 billion, while the COGEN Power Plantreceived the smallest fine, at NT$130 million.

IPP stakeholder responds

Meanwhile, Taiwan Cement, a stakeholder of one of the IPPs, indicated yesterday that they will contest the FTC's ruling in the courts.

US$1=NT$29.7