The implications of any resultant price increases could extend beyond Taipower, potentially leading to escalated expenses for energy-intensive sectors.

Taiwan has announced a substantial reduction in funding for its primary utility provider Taiwan Power (Taipower) in a move expected to result in increased power costs.

Lawmakers in Taiwan have approved a T$100bn ($3.1bn) cut from the 2025 budget for Taiwan Power, raising concerns over potential hikes in electricity prices that could affect key industries on the island, including top computer chip makers.

The decision was taken amid calls for a reassessment of the country’s energy strategy, according to local media reports.

The move is particularly significant as it may influence operational costs for some of the largest semiconductor manufacturers globally, as reported by Bloomberg.

The Democratic Progressive Party (DPP), led by President Lai Ching-te, lost its parliamentary majority in 2024, granting the opposition control over legislative spending proposals.

The Kuomintang (KMT), the primary opposition party, in collaboration with the smaller Taiwan People’s Party, has suggested a record T$214.7bn ($6.55bn) reduction in this year’s budget, which accounts for around 7% of the total.

Premier Cho Jung-tai stated: “We don’t want to pass on the costs either, as it’ll impact people’s livelihood too much.”

Taiwan Power Co states that this reduction would undermine its capacity to maintain power prices and hinder its ability to update and replace electrical infrastructure.

In response to the budget cut, Taipower stated that it would present its financial status and cost structure to the power price review committee for deliberation.

The utility highlighted that the eliminated subsidy was originally intended to mitigate its financial challenges, noting an accumulation of losses amounting to T$420bn ($12.8bn) by the end of 2024.

The implications of any resulting price increases could extend beyond Taipower, potentially leading to escalated expenses for energy-intensive sectors such as Taiwanese semiconductor manufacturing.

There are concerns that higher electricity rates might compromise energy security and deter investments in power infrastructure on the island, which is concurrently transitioning away from nuclear energy.