Newsletter
The Ministry of Economic Affairs Passed the Amendment Proposal for the Electricity Business Act
The Ministry of Economic Affairs Passed the Amendment Proposal
for the Electricity Business Act
Yi-Jiun Su/Vivian Cheng
Subsequent to the government's promotion of its green energy policy through amendments to the Electricity Business Act in 2017, the liberalization of the electricity industry has gradually moved towards the directions of diversified supply on the generation side and fair use of the power grid. To continuously improve the electricity market environment, strike a balance between efficiency management and open competition, and stimulate the green energy trading market while achieving the net zero emission by 2050, the regulatory scheme for the electricity market needs to be further developed to move with the times. Accordingly, the Ministry of Economic Affairs has made the proposal to amend partial provisions of the Electricity Business Act, which was officially announced on July 19, 2024 ("Amendment Proposal") for collection of opinions and suggestions from the public for a period of 60 days from the date following the announcement.
The Amendment Proposal primarily focuses on lifting certain existing restrictions on green energy trading. Meanwhile, in order to strengthen the power system and considering the development of emerging power resources, such as BESS (battery energy storage systems) and demand response measures, a new type of electricity enterprise is added to be regulated and supervised. Moreover, in light of the fact that the energy prices have been fluctuating dramatically in recent years due to geopolitics and the global pandemic, various power generation and grid construction projects require significant financial investment in order to ensure a stable power supply while achieving the goal of net zero emission. Consequently, it has been proposed to maintain the integrated/bundled business structure of (the vertically integrated monopoly electricity enterprise) Taiwan Power Company ("TPC") by removing the requirement for the division of its businesses. The key points of the Amendment Proposal are summarized as follows:
1. The definition of the "Renewable Energy Electricity Retailing Enterprise" is amended to remove the restriction to limit its counterparty only to end users, allowing transactions can be conducted between Renewable Energy Electricity Retailing Enterprises. (Amended Article 2)
2. By referencing the applicable laws of Japan and South Korea, for those non-traditional power supply methods, a new category of the "Specific Electricity Supply Enterprise" is included into the definition of Electricity Enterprise; and, new defined terms for the "Specific Electricity Supply Enterprise" and "BESS" are further prescribed. Meanwhile, procedures for applying for recordation approval and applicable licenses for the Specific Electricity Supply Enterprise are introduced. In respect of those who had already participated in the electricity trading platform through implementation of demand response measures, installment of BESS, and/or other methods of power supply prior to the enactment of the Amendment Proposal, a deadline is set for obtaining the applicable licenses so as to continuously participating in the electricity trading platform. (Amended Articles 2, 15, and 24)
3. Procedures for the reporting and approval of the commencement and suspension of business operation of an Electricity Enterprise are amended. Requirements for the reporting of commencement of business operation and emergency incidents, along with the associated penalties applicable to a Specific Electricity Supply Enterprise, are newly prescribed. (Amended Articles 19, 35, and 80)
4. TPC will maintain its integrated/bundled business model, thereby deleting the restriction that prevents an electricity transmission and distribution enterprise from concurrently engaging in other types of electricity business. It is further stipulated that TPC should adopt the principle of separation of accounting systems, with corresponding penalties amended accordingly. (Amended Articles 6, and 75)
5. It is newly stipulated that the operation of the electricity trading platform, depending on its development, will be reviewed and examined by the competent authority from time to time, so as to ensure the platform is operated in a neutral, open and transparent manner. (Amended Article 11)
If you have any questions on the Amendment Proposal, please do not hesitate to contact the members of our Energy Law Practice Group for more information.