“In discussion with the Ministry of Finance, including prices, etc.… Preferably at the end of this month”
(Sejong = Yonhap Infomax) Reporter Hyo-ji Lee = The government is considering a plan to raise industrial electricity rates in addition to household electricity rates to address the deficit of KEPCO.
Second Vice Minister of Trade, Industry and Energy Park Il-joon met with reporters on the 21st and said, “The recovery of the price function is the most important.
Industrial electricity users account for only 0.2% of the total users, but use half of the total electricity.
According to a survey by the International Energy Agency (IEA), as of 2020, the electricity rate for households in Korea was $103.9 per MWh, ranking only 31st out of 34 countries in the Organization for Economic Cooperation and Development (OECD).
Industrial electricity rates are also among the cheapest at $94.3 per MWh, which ranks 22nd among 34 OECD countries.
The OECD recently pointed out in the ‘2022 Korea Economic Report’ that Korea’s electricity rate is the lowest among OECD member countries, and that the electricity rate system is subdivided into residential, agricultural, and industrial use, so there is a large distortion of subsidies between sectors.
Vice Minister Park said, “The majority of large-capacity users claim to have a high cost recovery rate, but now it is only 60%.
He continued, “Electricity rates vary depending on how much and how much cost is recovered. Considering KEPCO’s deficit, it should be recovered quickly, but since it has an impact on business activities and prices, we are contemplating setting the period and width and are discussing with the Ministry of Strategy and Finance.” .
Vice Minister Park added, “It is desirable that the rate reform for large-capacity operators be decided by the end of September when the fuel cost adjustment unit price is decided in the fourth quarter if possible.”
He said that this week he will give an explanation of groups by industry and that Minister Lee Chang-yang will also arrange an explanation.
Deputy Minister Park also introduced a plan to launch an energy saving campaign, mentioning ways to increase the proportion of nuclear power plants with low power generation costs.
He said, “It is necessary to increase the operation of nuclear power plants as much as possible to reduce the part that leads to KEPCO’s charge burden.
The Ministry of Trade, Industry and Energy is currently discussing ways to increase the issuance limit of corporate bonds by the ruling party and KEPCO.
Vice Minister Park said, “It is stipulated in the KEPCO Act and there is no punishment provision, but the law should be revised by the end of the year.”
He said that he is not discussing the introduction of a windfall tax, which is being pursued in the European Union (EU), etc.
Deputy Minister Park said, “We have not withdrawn the SMP cap. We are discussing more regarding the extent to which the opinions of the Ministry of Trade, Industry and Energy’s Regulatory Review Committee are acceptable.”
The Ministry of Trade, Industry and Energy promoted a system to set an upper limit on the SMP applied by KEPCO when it purchases electricity from power generation companies in May, but it is unclear whether it will be implemented due to opposition from the private power generation industry.
PPPs argue that the surge in SMP and KEPCO’s deficit are due to KOGAS’ high gas price for power generation, and argue that the SMP price ceiling should not be established to regulate PPP operators, but rather enforce KOGAS’ gas price cap system for power generation.
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