(本文翻譯自 陳冲 電價是否看不見的手 2022.06.28.)
Anyone who has studied economics knows the invisible hand, a metaphor introduced by Adam Smith in the 18th century for the unseen force that helps the demand and supply of goods in a free market to reach equilibrium automatically.
As we all know, the price of electricity influences daily life of citizens and commercial costs as well. Thus, the aforementioned free market theory doesn’t appear to hold in this case and that’s why we have the electricity price review committee setting the price. Yesterday, the committee held an extraordinary meeting and roughly as predicted by the top officials of the Ministry of Economic Affairs, the electricity rate could be average “raised by 8 percent for heavy users while remain unchanged for business and households that use less than 1,000 kWh a month” as most media headline. However, that 97% of the household are not affected and small businesses and factories either means that only those large industrial and commercial high-voltage consumers take a hit. From the script of this electricity rate hike play, we can see that the ultimate guiding principle is to win the favor of users representing the majority of votes, just to avoid the negative response that may directly change the result of the election at the end of the year. So, is this the visible or the invisible hand manipulating behind?
Taiwan’s electricity price is relatively low among the world, ranking almost the last. In theory, if the price is lower than the market equilibrium price, it’s another kind of subsidy. The question is who bears the burden and who receives the benefit? From subsidy theory this week, there are numerous cases. For example, the NT$30 billion rent subsidies offered by the Ministry of the Interior and the subsidies for grouper farmers budgeted by the Council of Agriculture, etc., are basically subsidies at the price of people’s tax payments. In short, the subsidy comes from people’s hard-won possessions, in other words, out of their own pockets. Electricity price has been frozen for eight times in the past four years and this policy hadn’t conserved energy but instead distorted the resource allocation, accumulating the pressure for a one-time hike. After the UN COP26 last year, local people started to understand that no matter in terms of energy cost, carbon reduction, or even net zero sustainability strategy, overall hike is a price must be paid for the low power price delusion in the past. For instance, household consuming less than 700 kWh per month will face a small increase and those with more than 700 kWh will be increased overall to reflect the cost but may adjust by layers to reduce the impact. Only in this way can user charge be implemented and consumers learn the correct attitude using electricity.
The highest inflation after WWII might be the shadow lingering that deter the government from making right policy. Since last September, the whole world has relented and acknowledged the threat of inflation but Taiwan’s Directorate-General of Budget, Accounting and Statistics and Central Bank still denied the fact. The media has at least three times recited my appeal for the coming inflation storm from last October to January this year, but the authorities still persistently refused to admit it. On Mar. 29th 2022, Appacus Foundation published the article Inflation, If Unable to See Elephant In the Room, Grope It, requesting the government not only to face the music but adjust the CPI indicators to reflect people's feelings and social reality. At that time, the Directorate-General of Budget, Accounting and Statistics glossed over the issue, saying that CPI was only 1.97% last year and 3.04% in the first five months this year, and felt self-contented as the figures show lower than that of other countries. But the question is that can these cold CPI figures really reflect inflation? And is the price check reliable?
It is said that the industries also expressed concerns about the risk of unstable power supply, power shortage, power outage and voltage reduction. The concerns undoubtedly arise from doubts about the nuclear phaseout policy and the anxiety of using wind power and solar energy as base load. All should be considered together with the Energy Administration Act, the Climate Change Response Act, and the 高唱入雲Net zero 2050 to see if it really makes sense.
The electricity price review this time, although a one-way conversation barely dodging a bullet, once again exposed the deep-rooted illness of disrespecting the function of the market. Electricity price should be an outcome of the invisible hand, but pity is that elections are what the visible hand really wants to control.