From July 1, City Gas Rates Average 13.1%↓
Residential 11.2%·Industrial 15.3%↓
Small Business Owners and Self-Employed 12.7%↓…Monthly Average 30,000 KRW↓
[Asia Economy Reporter Moon Chaeseok] The government announced that starting next month, city gas prices will be reduced by an average of 13.1%. Residential use will decrease by 11.2%, expected to save 2,000 won in summer and 8,000 won in winter.
On the 29th, the Ministry of Trade, Industry and Energy stated that gas prices will be adjusted from the 1st of next month.
The average price for city gas exclusive use will change from 15.24 won per megajoule (MJ) to about 13.25 won, a reduction of approximately 2 won.
One cubic meter (㎥) of city gas contains 43.1 MJ of heat energy.
By usage, residential use will decrease by 11.2%.
City gas bills per household are expected to decrease by an average of 2,000 won per month in summer and 8,000 won in winter.
In summer, bills will drop from 20,000 won to 18,000 won, and in winter from 67,000 won to 59,000 won.
General Use 1 will be reduced by 12.7%. This category includes restaurants, cafeterias, school meal facilities, beauty salons, lodging businesses, swimming pools, and laundries.
Accordingly, city gas bills for small business owners and self-employed individuals are expected to decrease by about 30,000 won per month, from 230,000 won to 200,000 won.
Industrial use will be reduced by 15.3%.
The government explained that this adjustment comes one year after a 4.5% increase last July.
The reasons include ▲ a 17.1 percentage point decrease in raw material costs due to falling oil prices ▲ a 2.6 percentage point increase in settlement rates to resolve accumulated unpaid fees ▲ and a 1.4 percentage point increase in wholesale supply costs due to decreased sales volume.
Specifically, changes in international oil prices and exchange rates affect liquefied natural gas (LNG) import prices about 4 to 5 months later. These are reflected in city gas raw material costs.
Although LNG import prices fluctuate frequently, city gas prices have been frozen to maintain stability. This time, previously unreflected raw material costs (unpaid fees) have been incorporated.
Wholesale supply costs cover gas production and sales expenses incurred from using Korea Gas Corporation’s storage tanks and pipelines. As sales volume decreases, the supply cost per unit increases.
The Ministry of Trade, Industry and Energy explained that city gas retail supply costs will be adjusted separately by each city and province. Final city gas prices will be confirmed based on the variation in retail supply costs by region.
Additionally, from the 1st of next month, the ministry will introduce a dedicated transportation gas tariff. The scope of this tariff will expand from gas used for charging vehicles such as CNG buses to gas used for hydrogen production for vehicle charging.
Accordingly, transportation gas prices will be reduced by 17.4%, from 14.08 won per MJ to 11.62 won per MJ starting next month.
Meanwhile, the ministry plans to reform the city gas raw material cost linkage system starting August 1. Raw material costs for all city gas uses except residential and general use (such as industrial and combined heat and power use) will be automatically adjusted monthly. Currently, adjustments are made every odd month.
An official from the ministry said, "This will enhance the timeliness and predictability of prices, contribute to smooth production activities in the industrial sector, and minimize energy price distortion."
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