Electricity rates will remain frozen in the upcoming third quarter (July to September).
On the 23rd, Korea Electric Power Corporation (KEPCO) announced that it would maintain the fuel cost adjustment rate at 5 won per kWh, the same as the previous quarter, and keep other components such as the basic charge, energy charge, and climate environment charge at their current levels without additional adjustments.
This decision reflects both an effort to curb the burden of air conditioning costs ahead of the summer season and a consideration to partially preserve KEPCO’s revenue structure, which continues to deteriorate financially.
Electricity rates consist of four components: the basic charge, the energy charge, the climate environment charge, and the fuel cost adjustment charge. Among these, the fuel cost adjustment charge is a system designed to flexibly reflect recent short-term energy price trends in rates. It is determined each quarter based on the quarterly fuel cost adjustment rate.
The government has set the fuel cost adjustment rate for the third quarter at the maximum level of +5 won per kWh, which is the same rate already applied since the second quarter. KEPCO previously calculated the adjustment rate based on changes in actual fuel costs and submitted it to the Ministry of Trade, Industry and Energy. The government finalized the freeze policy after consultations with related ministries, including the Ministry of Economy and Finance.
Amid the prolonged heatwave this year and the controversy over the "electricity bill bomb," the government began reviewing electricity rate increases on the 23rd. An electricity meter is installed in a commercial building in Seoul. Photo by Kang Jinhyung
According to the calculation details, the actual fuel cost for the third quarter stands at 446.76 won per kilogram, which is lower than the standard fuel cost of 494.63 won per kilogram. In theory, this would have set the adjustment rate at about -6.4 won per kWh. However, considering that a significant amount of the energy charge, which accounts for the largest portion of electricity rates, remains unadjusted, the government instructed that the fuel cost adjustment rate for the third quarter should remain at +5 won per kWh.
The government explicitly cited KEPCO’s financial structure as the reason for this decision. The Ministry of Trade, Industry and Energy stated, “The fuel cost adjustment rate for the third quarter of 2025 will be set at the same level as the second quarter, taking into account KEPCO’s financial situation and the scale of unadjusted charges. KEPCO should ensure smooth implementation and thoroughly carry out internal efforts for management normalization.”
In fact, KEPCO has accumulated deficits in recent years because it was unable to timely reflect increases in fuel costs in electricity rates. The cumulative unrecovered fuel costs reached several trillion won by 2023, making normalization of rates alongside internal self-rescue measures for financial improvement a key task. The decision to maintain the fuel cost adjustment rate for the third quarter was also made against this structural backdrop.
The other components?basic charge, energy charge, and climate environment charge?will not be adjusted this quarter either. As a result, the fuel cost adjustment rate cap will be maintained for the 13th consecutive quarter since the third quarter of 2022, and the general electricity rate will remain frozen for the ninth consecutive quarter.
A KEPCO official stated, “There was a need for adjustment based on production costs, but it was inevitable to consider the public’s perceived burden due to increased power demand in the summer. In line with government policy, we will also pursue internal efforts such as cost reduction to achieve management normalization.”
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