Record Heatwave Leads to Electricity Rate Hike... Burden Expected to Increase
Small Business Owners Demand "Comprehensive Government Support Measures"
This summer, many small business owners are expected to face a "electricity bill bomb." This is because the use of air conditioners and other cooling devices typically increases during the summer, and electricity consumption in stores has surged following the end of the COVID-19 pandemic. Moreover, with electricity rate hikes and record-breaking heatwaves continuing, the current trend suggests that the heavy burden on small business owners is inevitable.
During the peak summer months of July and August, the electricity consumption of small business owners generally shows an upward trend. According to Korea Electric Power Corporation (KEPCO) on the 6th, the average monthly electricity consumption during last summer (July-August) for general low-voltage (Type A) customers was 1,586 kWh. This is a 39% (449 kWh) increase compared to May of the same year (1,137 kWh). The general low-voltage (Type A) rate is primarily applied to small business owners.
The general low-voltage (Type A) rate was increased by 28.5 KRW per kWh in three increments since last summer. Based on the pre-increase rate, if electricity consumption remains at last year's summer level, the cost this summer would be 296,640 KRW.
However, applying the increased rates, the average electricity bill for small business owners reaches 348,040 KRW. This means that the electricity bill burden for small business owners this summer will increase by 51,400 KRW (17.3%) compared to last summer.
Additionally, in June, the general electricity consumption including commercial and public use was 10,163 GWh, a 1.9% increase from June last year (9,978 GWh). Considering the trend of increased electricity use in shops and commercial buildings after the COVID-19 pandemic, the combined effect of electricity rate hikes and increased consumption could further amplify the burden.
In response, the power authorities are urging small business owners and root enterprises to actively utilize policies aimed at alleviating the summer electricity bill burden. Support for replacing high-efficiency devices and cooling equipment are representative measures.
Since June, customers who have obtained a small business owner certificate from the Ministry of SMEs and Startups can receive support funds increased by 1.5 to 2 times when replacing eight items, including LED (light-emitting diode) products, with high-efficiency devices. Additionally, retail stores such as supermarkets and convenience stores receive 90,000 KRW per square meter of installation area when installing doors on open-type refrigerators.
The government plans to invest 30 billion KRW from the Power Industry Infrastructure Fund to support the replacement of high-efficiency cooling devices. Small business owners purchasing energy efficiency grade 1 cooling or heating-cooling devices will receive support covering 40% of the product price.
There is also an installment payment system for electricity bills targeting small business owners and root enterprises. They can split their electricity bills from June to September into payments over 2 to 6 months.
KEPCO emphasized, "We ask small business owners to refrain from running air conditioners while keeping their shops open and to maintain indoor temperatures at 26 degrees Celsius, participating in efficient energy use."
Meanwhile, the Korea Federation of Small and Medium Business issued a statement on the 3rd, saying, "Although the government has introduced support measures, the industries that can benefit are limited, and the installment and deferred payment options for electricity bills are only temporary measures," and added, "Comprehensive measures that small business owners can feel, such as summer rate restructuring, are necessary."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
