[Asia Economy Sejong=Reporter Dongwoo Lee] #Mr. A, an office worker living in Sejong City, found the heating bill increase to be a hot topic among his family during this Lunar New Year holiday. Living alone in a 19-pyeong apartment, Mr. A only turned on the heating during the evening after work, but his bill came out to 150,000 won, more than 60% higher than last month. He said, "I used less than the previous month due to frequent business trips, but I was shocked that the maintenance fee for the small apartment exceeded 300,000 won."
#Mr. B, living in a mixed-use apartment in Ilsandong-gu, also recently posted a verification post on a real estate-related application after his maintenance fee approached 700,000 won. Dozens of comments with similar experiences poured in. He lamented, "Seeing the heating bill alone exceed 400,000 won last month, I felt that 'heating bills are scarier than the cold wave.'"
The heating bill shock caused by the global energy price surge has hit households. Those who received their December management fee bills last year were shocked by heating bills that had at least doubled. Complaints about the sharply increased heating bills, which are hard to accept, flooded community forums. Heating bills per household rose by an average of more than 1.5 times, and the 'communal heating fees' shared by all households skyrocketed by tens of times in some cases.
The reason behind the soaring heating bills is the average price of liquefied natural gas (LNG), the raw material for city gas, which surged 127.6% from $15.04 per MMBtu (million British thermal units) in 2021 to $34.24 last year. This is why the government raised the civilian gas price by a total of 5.47 won per MJ (megajoule) in four increments over the past year.
According to the Ministry of Economy and Finance on the 26th, last year city gas prices increased by 36.2% and district heating fees by 34.0% compared to the previous year. As the unpaid balance of Korea Gas Corporation is estimated to have increased from 1.8 trillion won in 2021 to 8.8 trillion won last year due to the rise in LNG prices, the government decided on phased price hikes to completely resolve the unpaid balance by 2026. Gas price increases have already materialized since last year. However, due to milder weather than usual in November last year, the actual impact of the increase was not felt until the record cold wave last month led to increased heating usage, triggering the management fee shock.
The problem is that gas price hikes are inevitable in the second quarter of this year as well. Earlier, the Ministry of Economy and Finance froze gas prices in the first quarter to ease the burden on low-income households but announced plans to review price increases starting in the second quarter. The government believes that to resolve Korea Gas Corporation's unpaid balance, gas prices must be raised by at least 8.4 to 10.4 won per MJ this year. This means a minimum increase of nearly 3.0 won per quarter is necessary.
The possibility of prolonged high inflation due to public utility price hikes cannot be ruled out. The Ministry of Economy and Finance raised electricity rates by 13.1 won per kWh in the first quarter of this year, predicting that this would increase inflation by 0.15 percentage points. Experts expressed concerns that if gas price hikes are added, the consumer price inflation rate could exceed last year's 5.1%.
Researcher Mungyungwon from Meritz Securities pointed out, "The unpaid balance of Korea Gas Corporation could expand to about 14 trillion won after the first quarter of next year," adding, "The scale is too large to underestimate the risk associated with the unpaid balance."
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