Electricity Rates to Increase Next Month

3.0 KRW per kWh ↑... KEPCO Raises Rates for the First Time in 8 Years
Monthly Increase of 1,050 KRW for a 4-Person Household Using 350 kWh

[Sejong=Asia Economy Reporter Kwon Haeyoung] The government and Korea Electric Power Corporation (KEPCO) have decided to raise the electricity rates for the fourth quarter, effective from the 1st of next month. This decision was made as it has become increasingly difficult to bear the burden of soaring fuel costs that have continued since the beginning of this year, coupled with KEPCO's growing deficit. This is the first time in eight years since November 2013 that the government has raised electricity rates.

On the 23rd, KEPCO announced that it would apply the final fuel cost adjustment unit price for October to December at 0.0 won per kWh, which is 3.0 won higher than the third quarter. The government and KEPCO applied a fuel cost linkage system to this year's electricity rates, maintaining the adjustment unit price at around -3.0 won per kWh until the third quarter. With this increase, electricity rates have returned to the same level as last year. Accordingly, for a household of four using an average of 350 kWh per month, the electricity bill will increase by 1,050 won each month.

The government introduced the 'fuel cost linkage system' this year, which periodically reflects the rise and fall of power generation costs in electricity rates, setting the first quarter fuel cost adjustment unit price at -3.0 won per kWh. Although fuel costs such as crude oil surged afterward, electricity rates for the second and third quarters were frozen for the sake of stabilizing citizens' livelihoods. There were criticisms that this effectively nullified the fuel cost linkage system due to concerns about public sentiment ahead of the April 7 Seoul and Busan mayoral by-elections and next year's presidential election.

However, with the rapid rise in fuel prices for electricity production, including liquefied natural gas (LNG), bituminous coal, and oil, it has become impossible to delay the electricity rate increase any longer.

An official from the Ministry of Trade, Industry and Energy explained, "Fuel costs have surged, accumulating many factors for electricity rate increases. If the increase is not reflected in electricity rates in a timely manner, it could distort the power consumption structure, so the adjustment was inevitably carried out."