[Inside Chodong] Heating Bill Shock: The Need to Ease the Impact on Living Costs

[Image source=Yonhap News]

Complaints are pouring in from households that their heating bills for this month have soared far above those of previous years. Despite lowering indoor temperatures and wearing thermal underwear indoors to conserve energy, the arrival of the coldest wave this winter has increased the likelihood that heating bills billed next month will rise even further.

Domestic city gas prices are determined by Korea Gas Corporation, which imports liquefied natural gas (LNG) and sets wholesale prices, after which local governments add supply costs to decide retail prices. Last year alone, wholesale gas prices for residential use increased four times by 5.47 KRW per megajoule (MJ), resulting in a 38.5% rise over the year. This was due to the global energy supply shortage accelerating amid the Russia-Ukraine war and other factors, causing LNG import prices to jump 40.5% from 893 KRW per ton in December 2021 to 1,255 KRW per ton in December last year. The heat charges for district heating, not city gas, also rose by 37.8% over the past year.

Electricity rates also increased three times last year by 19.3 KRW (17.9%) per kWh (kilowatt-hour), and surged again by 9.5% at the start of the new year. Many households use electric blankets or heaters alongside heating to raise indoor temperatures, but this option has also become less affordable. With city gas, heat charges, and electricity rates all rising simultaneously, the perceived increase in heating costs for each household has grown, and complaints have surged that apartment management fees, including heating costs, have nearly doubled compared to usual.

On top of this, local governments are considering raising public utility fees across the board, including subway, bus, taxi fares, and even water and sewage charges?expenses that are unavoidable in daily life. With global raw material prices soaring and abundant liquidity fueling inflation, public utility fees cannot remain unchanged. While some acceptance exists for public enterprises’ claims that long-term accumulated losses make rate hikes inevitable, the steep and simultaneous increases at this scale impose a heavy burden on ordinary households and could threaten the survival of vulnerable groups during the already harsh winter.

The ruling and opposition parties, which should be focusing on stabilizing people’s livelihoods, are instead engaged in mutual blame games. The Democratic Party of Korea accuses the Yoon Seok-yeol administration of exacerbating the suffering of ordinary citizens by sharply raising electricity and gas rates, blaming the government’s incompetence and mismanagement, and has even mentioned introducing a 'windfall tax' demanding that oil companies, which earned record profits, share the pain. Meanwhile, the People Power Party argues that during the previous Moon Jae-in administration, gas prices rose two to three times but heating fees were only increased by 13%, leaving all the burden to the current Yoon administration, and claims that reckless nuclear phase-out policies caused the heating cost surge, placing responsibility on the former government.

Although the government and public enterprises should be urging people to save energy to overcome the current situation, efforts to thoroughly explain the inevitability of rate hikes and gain public understanding have been insufficient. Only after the heating bill shock landed in the hands of the public did they hurriedly announce on the 26th temporary measures to expand energy vouchers and provide additional gas discounts for vulnerable groups such as basic livelihood security households and elderly patients.

The bigger problem is that future public utility fee hikes are highly likely to trigger a vicious cycle that further fuels living cost inflation, which is already becoming a reality. Continued price increases reduce households’ real income and cause them to tighten their wallets, inevitably delaying domestic economic recovery and consumption. While each public utility fee hike, including heating costs, has its own reasons and circumstances, measures to minimize their impact and side effects must be prepared first.