[Featured Stock] 'Will Electricity Rates Freeze?'... Korea Electric Power Corporation Weakens as Fuel Cost Adjustment Unit Price Announcement Delays

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] Korea Electric Power Corporation (KEPCO) is showing weakness on the 21st following the postponement of the fuel cost adjustment rate announcement. Contrary to expectations of an electricity rate hike, the sudden delay in the announcement has raised the possibility of rates being frozen.

As of 9:25 a.m. on the 21st, KEPCO is trading at 23,250 KRW, down 3.13% (750 KRW) from the previous trading day.

KEPCO announced on its website, "On the 20th, the Ministry of Trade, Industry and Energy informed us that consultations with related ministries regarding the calculation details of the fuel cost adjustment rate for the second quarter of 2022 are ongoing," and "We were notified to finalize the second quarter fuel cost adjustment rate after receiving the results."

Earlier, the current government had decided to raise the standard fuel cost applied this year twice, in April and October, by 4.9 KRW per kWh each time, totaling 9.8 KRW. The climate environment fee was also planned to increase by 2 KRW per kWh starting in April. This was due to KEPCO recording a deficit of 6 trillion KRW last year and expecting a deficit of up to 20 trillion KRW this year because of the surge in fuel costs.

Yoon Seok-yeol, the 20th President-elect, pledged during his campaign to cancel the electricity rate hike. The fact that KEPCO overturned the announcement of the fuel cost adjustment rate and stated it is consulting with the Ministry of Trade, Industry and Energy has led to analysis that the transition team is reconsidering the fuel cost adjustment rate. If electricity rates are frozen, KEPCO's deficit is expected to widen, making a deterioration in performance inevitable.