The electrical supply industry in Taiwan is moving towards liberalization due to the influence of the innovation of information technology as well as the global economic trend. To open up private investment opportunities and enable funds to be more easily obtained, the Taiwan government has proposed the Electricity Act Amendment to improve the investment environment and restructure the industry. According to the draft of the Electricity Act Amendment, the main component of Taiwan’s deregulated power market will be the forward bilateral market. Taiwan ISO will be the core body of future power market and power system operations.
Successful or not, the deregulation of the electricity supply industry will influence not only the competitiveness of the industries but also the well-being of the general public. However, how to deregulate the electricity supply industry depends on the particular environment of each individual country and on the objectives of the reform. Among the advanced countries, the UK started to deregulate its state-owned power industry in 1989. Its vertically-integrated power industry was functionally restructured into generation, transmission and distribution sectors and a mandatory power bidding market was established for determining the dispatch of electricity. The UK’s experience has subsequently been simulated and adopted in many other countries. In the early 1990’s, the US, Australia, New Zealand and the European Union also started to deregulate their power markets, although they used somewhat different approaches. As to Asian countries, the deregulation reform started only relatively recently. Singapore was the first Asian country to deregulate its electricity industry by adopting New Zealand’s approach to deregulation. Japan also started to open up its electricity retail market by abolishing utility franchises on sale to high voltage customers in 2000. Korea implemented deregulation by adopting the UK’s style of restructuring in 1998. Furthermore, India, Thailand, Hong Kong, the Philippines, China and other countries also initiated their deregulation schemes only recently. The trend toward the deregulation of the electricity supply industry has already become a worldwide phenomenon.
Enhancing the competitiveness and efficiency of the industry are common objectives of the reform. Each country has adopted different approaches suited to its need to liberalize its electricity industry. However, not all of their experiences have been successful and without problems. For example, a notorious power crisis occurred in California in 2001. Large-scale outages or excessively expensive incidents have taken place in many jurisdictions such as PJM, London, Italy, the Nordic area, New Zealand and so on. Recently, Korea has also encountered obstacles of deregulation that have temporarily halted its progress. This indicates that a soundly-designed assessment method is important to evaluate the success of the reform. We need this to see whether other countries’ experiences have either been successful or have failed. Thus, the assessment method can be applied to check the design of electricity deregulation and to avoid the loopholes on the road to deregulation in Taiwan.
The purpose of the study is therefore to compare, analyze and collate the relevant data regarding the deregulated power markets amongst various countries. As a result of the comparison, the basic requirements and mechanisms necessary for a successful deregulation of the electricity industry were concluded. A proper assessment method with key performance factors was designed for the evaluation of each country’s power deregulation. Finally, general conclusions and recommendations including the key factors to success for electricity liberalization were made to the Taiwan’s decision makers and government for its electricity liberalization.
