Collection of basic fees during cutoff periods as required by for in the Business Charters of Taiwan Power Company and Taiwan Water Supply Corporation
Chinese Taipei
Case:
Collection of basic fees during cutoff periods as required by for in the Business Charters of Taiwan Power Company and Taiwan Water Supply Corporation
Key words:
cutoff periods, basic fees, monopolistic enterprises,
Reference:
Fair Trade Commission Decision of 11 February 1998 (the 327th Commission Meeting); Letter (87) Kung Erh Tzu No. 8511202-009
Industry:
Electricity Supply Industry (3010); Water Supply Industry (3040)
Relevant Laws:
Article 10 of the Fair Trade Law
Summary:
Members of the public have written complaint letters to the Fair Trade Commission to the following effect: both Taiwan Power Company (TPC) and Taiwan Water Supply Corporation (TWSC) prescribe that consumers shall not have electricity or water supply restored until they pay the basic fees charged during the cutoff period. However, as the users did not use any electricity or water during the cutoff period, TPC and TWSC's collection of basic fees during that time obviously violates the provisions of Article 10(1)(ii) of the Fair Trade Law.
According to the Commission's investigation, Article 78 of TPC's Business Charter, prescribed that users who want to resume the electricity supply contract must pay the basic fees charged during the cutoff period. Article 9 of TWSC's Business Charter also prescribed that users who want to restore the water supply shall pay half of the basic fees charged during the cutoff period, based on the caliber of the water pipes.
In order to maintain sufficient supply at the needed hydraulic pressure and voltage for users, public utilities may charge minimum fees or basic fees to support the costs of operation maintenance, which is allowed by all parent laws for public utilities, e.g., Article 63 of the Tap Water Law, Article 64 of the Electricity Industry Law, and Article 25 of the Regulations Governing the Management of Gas Enterprises. The contract between the user and public utilities is one of continuing supply as the user agrees to make payments on a long-term basis. If one of the parties involved in such contracts decided to terminate the contract, the contractual relationship would extinguish following such termination. That is, when the user applied for a cutoff, public utilities would immediately tear down the meter or put lead sealing on the meter. As the contractual relationship between the two parties ended, the user shall clear the bills due when the contract was still effective or the fees for the current month, while the public utilities need not maintain sufficient supply for the particular user. Therefore, during the cutoff period, there was no contractual relationship between the user and the public utilities; it made no sense to have the user contribute to the basic costs of operation maintenance borne by the public utilities. So, the provisions listed in the Business Charters of TPC and TWSC that require the user requesting restoration of power or water supply to pay the basic fees charged during the cutoff period were in theory indicating that the public utilities might have abused their competitive advantage derived from its monopolistic status.
At present, among public utilities, only TPC and TWSC charge users who ask for the restoration of electricity or water, and whose cutoff period is no longer than two years, to pay half or full basic fees. The Taipei Water Department (TWD) in its Business Charter also prescribes the collection of basic fees upon restoration of water supply. But in practice, only those whose water supply has been cut off due to violation of the Business Charter are charged basic fees upon restoration, while the requirement does not apply to those who choose to suspend the supply because they do not need it. In addition, the TWD has been working on revising its Business Charter. On the other hand, no similar rules are found in the business charters of gas enterprises. Therefore, judging from the written rules and practice of different public utilities, collection of basic fees upon restoration does not seem essential.
Public utilities' basic operational costs are included in the price structure of their bills. The line connection fees they charge the users are surpluses that help them recoup the costs of pipe depreciation and maintenance. If public utilities use this reason to justify the collection of basic fees, they are actually double-charging the user, which seems unreasonable.
The investigation also showed that public utilities usually require the user who asks for restoration of supply to pay the bills due from the cutoff point to the restoration. TPC and TWSC are the two public utilities that collect basic fees, while the others charge so-called "restoration fees." Among these public utilities, TWD does not charge basic fees, but collects restoration fees instead, which are higher than both the water restoration fees together with the water suspension fees charged by TWSC, and the "electricity restoration fees" charged by TPC. So, based on these facts, the basic fees charged by TPC and TWSC, whether in half or full amount, combined with the water or electricity restoration fees, were not much higher than the restoration fees charged by other public utilities, which did not charge the basic fees. Therefore, no improper profiteering took place. If in their business charters, public utilities require collection of basic fees upon restoration of water/electricity supply, approval must be obtained before such provisions are put into practice. As the business charters of TPC and TWSC are in violation of the essence of the Fair Trade Law, the Commission is to consult with the respective competent authorities pursuant to Article 9 of the Fair Trade Law.
Summarized by Lin, Fen-hsiu
Supervised by Yu, Su-su
Appendix:
Taiwan Power Company's Uniform Invoice Number: 03795904
Taiwan Water Supply Corporation's Uniform Invoice Number: 52242444