Chapter 4: Results
4.9 Taipower’s Double Edged Sword
Taiwan Power Company Report
The report emphasizes the dangers of reckless reforms, and raises concerns about Taipower’s rights and its ability to provide services to every citizen. The report highlighted that given the extreme levels of uncertainty caused by the current political situation, it is extremely difficult for the company to make long term plans and investments.
The report suggests that the population does not seem to understand the difference between total installed capacity and available capacity. The way that co-gen is being
reported makes it appear as though it is a reliable source of power that can be mustered on demand, rather than the reality of surplus wholesale available at inconsistent times. This is evident by examining the civil society discourse (Fang, Jay, 2016), and that even reputable newspapers are unable to make the distinction suggests that electricity statistics need to be written more clearly. Even this researcher was originally stumped by this conundrum. The only recent official document where this issue has been clarified seems to be in Taipower’s own report (Taiwan Power Company, 2016), and is not addressed in the Bureau of Energy’s Handbook or long term power outlook. Inquisitive citizens do not have an easy means to check this themselves, and combined with current incentives, are not irrational in suspecting Taipower of bad faith. When combined with the lack of credibility that the KMT brings - Taipower’s most vocal political supporter - it sheds further concern.
4.9 Taipower’s Double Edged Sword
Taipower was created in 1946 by the ROC government, and then operated
continuously during the martial law period. Though there have been incremental changes in
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the Investor-Owned-Power plant regulations and co-gen availability, Taipower isfundamentally governed the same way it always has been.
This is one area where Taiwan’s democracy works against it. Taiwan has democratized, and its citizens are eager to find “social enemies” to protest against. The current ruling party - the DPP - was born as a protest party, and won the last election in a landslide. Taipower’s configuration as a state-owned industry under the direct control of the legislature, then makes it extremely politically vulnerable. It does not have the power to set prices in attempts to curb demand generally, nor does it have any means of setting off-peak pricing to level the demand curve encourage shifting of consumption to times when power is cheaper to produce.
What has made Taipower so effective over the years under martial law, or post-democratization with a sympathetic legislature, has now made it intensely vulnerable to the DPP-controlled legislature. Civil society groups who are extremely suspicious of monopolies, and value the noble ideas of conservation, may vote against what is ultimately their own interests, and the DPP will let them. It takes years, even decades to change the composition of a country’s energy and electrical systems. The fourth nuclear power plant was originally proposed in 1978 (Lassen, 2000) Construction did not begin until the late 90’s, and were it not for the mothballed project, only the first reactor would be operational today - 38 years after the initial proposal. These cycles are much longer than the careers of many politicians, let alone an electoral cycle.
DPP politicians will continue to embrace potentially unfeasible renewable energy initiatives at the hands of their constituents because they will be electorally rewarded, and though potential losses will be economically devastating, it is unlikely that today’s politicians will have to pay the political or economic price.
Moreover, the current system for rationing electricity prioritizes both essential public services and residential users. As mentioned in the background section, an overwhelming majority of Taiwan’s electricity usage is industrial, and while this does indeed support much of Taiwan’s economy, it is unlikely that a majority of the voting public would immediately
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notice a change. In the event of sudden, large scale cutbacks, factories would close or reduce production - but voters would be unlikely to notice and immediate change in their quality of life. Their air conditioners would still work, electrified public transit such as the Metro (MRT), Taiwan Rail Administration (TRA), and High Speed Rail (HSR)would still function. Smartphones would charge. The consumer side of life in Taiwan would continue unabated, initially. Environmental groups would say “Look at all of this scaremongering! The KMT and the large corporations want to put us under martial law, destroy our beautiful island with belching smokestacks, and harm our health with vile nuclear waste for their own profit!”This line of reasoning is compelling and well circulated. Populism is brewing all over the world, and Taiwan’s version of it is a strange form of eco-populism tied into to modern Taiwanese identity.
And so even as the Taiwanese electrical crisis worsened, even as its export oriented economy is undermined, the voters would continue to doubt the voices of restraint.
Taipower is constrained by the legislature, the legislature is constrained by voters.
Voters do not have a direct, immediate stake in the system. Taiwan’s democracy, in this case, is working against itself because the institutions governing energy are still configured for a country under martial law. A dictatorship in a developed or semi-developed has an incentive to ensure steady supply of electricity over the long term if it wants to avoid a coup, and by nature cannot be punished electorally. It is therefore free to make long term
investments in infrastructure. This has long been a strategy followed by the Communist Party of China.
To deal with this problem, the United States and other democracies have relied on politically independent energy agencies to manage and recommend policies, along with liberalized electricity markets to provide incentives to guarantee many participants in the electricity sector. The United States does this by having separate regional actors. Different regions have different policies. Some are completely privatized electrical markets, while others are public-private partnerships, and the Tennessee Valley Authority is a Federal monopoly. In the Northwest, a federally-owned power transmission company which owns
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some generating capacity is required to provide transmission to anyone who wants it at a reasonable fee, and they then resell it to municipalities or rural electric corporations, who are responsible for distribution. Thus, policy, generation, transmission, and distribution are all managed separately by politically independent actors, some of whom are regulated private companies, or even entirely private. This has the advantage of ensuring that so many actors are more difficult to be targeted for pure political opportunism. Though the American model has many disadvantages, as Banks notes on numerous occasions in his critiques about the dangers of privatization (Banks, 2007), it has the unintended side effect of making the power industry as a whole more politically robust.However, partial or complete liberalism are not the only solution to this problem. The Tennessee Valley Authority in the US is entirely publicly owned, and most of its generating capacity is also public. While it is publically owned and the subject of periodic political
upheaval, it is shielded from direct operational interference from the political sphere, with the ability to control prices.
Taipower is a serious victim of the horns effect. The Horns Effect, referencing the appearance of a western demon, is a well-documented cognitive bias that causes one’s judgement to seriously impaired by a first impression. All subsequent judgements of a subject, being colored by an initial first impression that creates a snowball effect. Thus, it becomes easier and easier to scapegoat a single subject.