Economic Groups Express Concern Over Business Contraction Due to Triple High Burden Amid Electricity Rate Hike (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporters Hyungil Oh and Chaeseok Moon] Economic organizations have expressed concerns as the government and Korea Electric Power Corporation (KEPCO) decided to raise electricity rates.

On the 30th, Yoo Hwan-ik, head of the industrial division at the Federation of Korean Industries, said, "We are worried that the already strained business activities of our companies, facing high inflation, high exchange rates, and high interest rates, may be further restricted."

On the same day, KEPCO announced that it would implement a differentiated increase in electricity rates for industrial and general use starting next month.

He acknowledged, "We recognize that this government's electricity rate hike is inevitable due to unprecedented international energy price increases and KEPCO's astronomical deficit resolution," but added, "We are concerned that the differentiated increase for energy-intensive companies may accelerate the contraction of business activities of our companies already at their limits due to high inflation, high exchange rates, and high interest rates."

He continued, "While major advanced countries are raising electricity rates amid the current energy crisis, they are also considering subsidies to the industrial sector to protect their domestic industries' competitiveness," and said, "The fundamental solution is to establish a price system based on market principles and costs to improve energy efficiency across society, including both the industrial sector and general households."

He also urged, "The government should promote a nationwide energy-saving campaign and foster a social atmosphere to overcome this winter's energy crisis," and promised, "Companies will actively cooperate in energy saving and overcoming the energy crisis."

The Korea Chamber of Commerce and Industry also stated, "Considering the rise in international energy prices and KEPCO's deficit, the electricity rate increase is inevitable," but pointed out, "However, given the recent high exchange rates, high interest rates, and high inflation, and the very difficult economic situation, the electricity rate hike is indeed a heavy burden for companies, especially small and medium-sized enterprises including the root industries."

They added, "The energy supply crisis cannot be resolved by the government or companies alone," and emphasized, "Active participation by the public in daily life, such as maintaining appropriate indoor temperatures during winter, using high-efficiency appliances, and using public transportation, will be necessary."

They also proposed, "It is necessary to expand subsidies for consumers purchasing energy-saving products and to increase financial and tax support to encourage companies to invest in energy-saving facilities."