The purpose of this paper is to investigate the reform of the electricity industry in Taiwan, We first outline the current situation in Taiwan, Second, we analyze the government policy for promotion of cogeneration, the opening of the market for power generation to independent power producers and the revision of the Electricity Act, Third, some implications of the government deregulation policy and difficulties in relation to future regulatory reform of the electricity industry in Taiwan are discussed, Finally, a brief conclusion and several recommendations are presented.