Representatives of group companies, including CEO Jeong Seung-il of KEPCO, hold an emergency response committee meeting at the KEPCO Art Center in Seocho-gu, Seoul on the 18th. The meeting was held to share the situation of KEPCO’s severe business crisis triggered by the surge in global fuel prices and the prolonged war in Ukraine, and to discuss countermeasures. News 1
On the 24th, the Ministry of Trade, Industry and Energy decided to implement the ‘Electricity purchase price ceiling system’, which places an upper limit on the price of electricity that KEPCO purchases from power generation companies when international fuel prices soar. When fuel prices soar, KEPCO’s electricity purchase price also surges, which inevitably acts as a factor in raising electricity rates. Therefore, this measure is aimed at easing KEPCO’s surge in electricity purchase costs in case of an emergency, ultimately stabilizing consumer electricity prices.
However, in reality, this measure is to temporarily close the power supply system crisis caused by the surge in international fuel prices and incorrect electricity price policies, and even that is highly likely to be just a ‘tinker prescription’. The Moon Jae-in government has been struggling to suppress the increase in consumer electricity prices. In the first half of his term, he was conscious of the public opinion criticizing that he was trying to make up for the burden of excessive ‘nuclear power generation’ with an increase in electricity rates, and later, he was conscious of elections, despite the rise in fuel prices.
In the name of alleviating the burden on the public from COVID-19, the increase in the standard fuel cost (9.8 won/㎾h) was even postponed to be reflected in this year’s rate. As a result, KEPCO’s operating loss in the first quarter surged to a record high of 7.8 trillion won. With this measure, the market price (SMP) at which KEPCO purchases electricity from power generation companies in the event of a surge in fuel prices will be adjusted to within 1.25 times the normal maximum. This is a structure in which power generation companies share the burden of cost increases. Of course, when the fuel cost of the power generation company is higher than the upper limit, the government compensates for the difference in fuel cost, so the burden ultimately falls on the public.
In this way, it is difficult to solve the problem. In particular, compared to last year, fuel prices are expected to rise by an additional 53%, Newcastletan 137%, and LNG spot prices by 126% compared to last year. easy to become Even now, the government should inform the public of the crisis in the power supply system caused by the ‘nuclear phase-out’ policy, etc., and take structural measures such as an increase in electricity rates on the premise of financial input for normalization and support for small businesses.
