From November 1, Residential Standard Rate to Increase by 0.0465 KRW per Megajoule, Average Additional Monthly Cost of 56 KRW per Household
Government Raises City Gas Wholesale Price by 7.3%, Minimizes Retail Supply Cost Increase to Ease Public Burden
Busan City will increase the retail supply cost of city gas by 2% for each usage category starting November 1.
This increase is due to the rise in supply costs caused by soaring international energy prices, higher raw material costs, decreased consumption due to rising temperatures, increased labor and material costs, and the need to secure investment resources for economically unviable areas such as high-altitude and remote regions.
City gas rates are determined by combining the wholesale price, which accounts for 85-90% of the total, and the retail supply cost, which makes up 15-10%. The Minister of Trade, Industry and Energy approves the wholesale price, while the retail supply cost for residential and industrial use is approved by city and provincial governors.
With a 2% increase by usage category, the consumer rate for residential use will rise from 2.3226 won to 2.3691 won per megajoule (MJ), an increase of 0.0465 won, resulting in an additional average monthly burden of about 56 won per household.
Although a service study for calculating city gas supply costs suggested an 8.89% increase by usage category, the recent rise in wholesale gas rates (up 1.41 won/MJ or 7.3% for residential use as of August 1) led to minimizing the increase in the retail supply cost to ease the burden on citizens. Considering the basic fee, the average supply cost increase is 2.98%, which is the lowest level nationwide.
Busan City Gas continues to invest in expanding city gas supply to economically unviable areas and in social contribution projects for low-income households.
As part of a 'social consideration investment' for energy-deprived areas such as densely populated single-family housing zones, an investment of 10 billion won is underway. Additionally, 6 billion won will be invested over the next five years in supporting facility contribution fees for demand in economically unviable areas and in pipeline investment social contribution projects for unsupplied regions.
Park Dongseok, Director of the Advanced Industry Bureau of Busan City, stated, "This increase in the retail supply cost of city gas is an unavoidable measure due to the decrease in usage caused by rising temperatures and the overall cost increase from higher labor and material costs," adding, "We will continue to encourage city gas companies to reduce costs and strive for reasonable rate adjustments through proper cost calculation."
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