Manufacturing firms say they’re stunned by the government’s plan to raise power prices. Starting July 1, electricity rates will go up by 15% for heavy industrial users. For chipmaker TSMC, the annual cost of electricity will rise by nearly NT$5 billion. China Steel Corporation expects to pay an extra NT$800 million. On Tuesday, the Taiwan Association of Machine Industry said that the price hike was much higher than anticipated and could impact pay raises for staff.

Taiwan will increase its power rates on July 1. For heavy industrial users, rates will rise by 15%, jumping to NT$3.103 per kilowatt-hour for high-voltage consumption and NT$2.5707 for ultra-high voltage. For Taiwan’s 22,000 enterprises, the price hike comes as a huge blow.

Larry T.W. Wei
Taiwan Association of Machine Industry chairman
You could say that we’re shocked. If we’re being honest, we didn’t expect prices to rise so much. Tomorrow we’re discussing salary adjustments. They were originally thinking 6% or so. But now we have to consider the new power rates, so we might have to shave off 1 percentage point.

How much will the 15% increase impact industrial users? For market heavyweight TSMC, the power bill will rise by nearly NT$5 billion per year. China Steel Corporation says it will pay an extra NT$800 million. However, most of Taiwan’s small and medium-sized enterprises will be spared from the price hike.

Lee Yu-chia
National Association of SMEs chairman
Ninety-eight percent of small and medium enterprises use less than 1,000 kilowatt-hours a month, so the price hike won’t affect them. This will ease the impact on domestic demand.

Industry reactions to the price hike have been mixed. The government enacted a price freeze for sectors most affected by the pandemic, such as agriculture and fisheries, food, department stores, restaurants, cinemas, and gyms. However, hotels were left off the list, raising an outcry from proprietors.

Chang Ching-chun
Hotel manager
We hardly have any guests now, so this is just adding insult to injury. We''re having a very difficult time, so of course we hope to be included in the list for price freezes.

Paul Hsu
R.O.C. General Chamber of Commerce chairman
The review committee kept saying that the borders would reopen soon. It said that business travelers and tourists would return, giving a boost to business hotels and easing the pressure of the power price hike. So yesterday, the committee did not add hotels to the list.

With hotels set to be hit with a price hike, many in the sector are crying foul. But for many Taiwan enterprises, the top concern is not the higher cost of power but whether the grid can keep pace with demand.