Lee Chang-yang "Electricity rates to rise significantly next year... Targeting KEPCO deficit resolution"

[Asia Economy Sejong=Reporter Dongwoo Lee] Lee Chang-yang, Minister of Trade, Industry and Energy, stated regarding next year's electricity rates, "We will raise them to a considerable level within a range that does not cause a significant shock to households and businesses."

At a dinner meeting with the press corps on the afternoon of the 28th, Minister Lee said, "There are many factors driving the electricity rate increase, and the rate of increase is being finalized," adding that the Ministry of Trade, Industry and Energy plans to decide the extent of the electricity rate hike for the first quarter of next year, including the '2023 Q1 fuel cost adjustment unit price,' through the Electricity Committee within this week.

Minister Lee explained, "There has been talk of an increase of 51.6 won per 1 kWh, which should be understood in the context of considering next year's increase factors," and added, "We will set the rate of increase under the broad framework of resolving Korea Electric Power Corporation's cumulative deficit by the end of 2026."

Previously, the Ministry of Trade, Industry and Energy set next year's electricity rate increase at 51.6 won per 1 kWh, which is the sum of the base fuel cost of 45.3 won, climate environment fee of 1.3 won, and fuel cost adjustment unit price of 5 won. Considering the average monthly electricity consumption of a four-person household (307 kWh), this would result in an increase of 15,000 won per household.

Minister Lee also emphasized the expansion of nuclear power and renewable energy for stable power supply. He pointed out, "We must maximize the current capacity of nuclear power to maintain the power reserve rate," adding, "Only then can stable power supply be ensured, and it becomes a factor in lowering KEPCO's electricity cost."

He further explained, "Although the solar power ratio is relatively large, its efficiency is low, so wind power, which has a positive impact across the industry, is more important," and added, "We will reduce the solar power ratio and strengthen offshore wind power generation."

Minister Lee reiterated the export growth target amid difficult external economic conditions next year. He said, "The forecast that exports will contract by 4.5% next year is based on quantitative data analysis, but it can change significantly depending on how the situation unfolds throughout the year," and added, "The Ministry of Trade, Industry and Energy will go to the field, gather ideas on-site, think together, and strengthen communication."

The government plans to support corporate policy backing on the ground to achieve next year's export target of 680 billion dollars (approximately 862 trillion won).