2023-10-08 09:24:25
Review of electricity rate increase in the 4th quarter
Only 1.3 trillion won in savings due to ‘SMP cap system’
Even if rates are raised in the first and second quarters, there will be a deficit of 8.4 trillion won.
High inflation, general election… It’s not easy to upload
“A decision will likely be made next month following the self-rescue plan is announced.”
▲ Page 6 ‘Establishment of a financial improvement plan worth KRW 25 trillion, including a plan to sell assets, promotion of additional self-rescue measures including manpower efficiency, and measures to limit the increase in the wholesale power price (SMP), which were pursued despite opposition that it would destroy the energy ecosystem… .’
Korea Electric Power Corporation (KEPCO) and the government, which have been exploring various financial soundness measures since the second half of last year, finally began considering a double-digit increase in electricity rates by more than 10 won per kWh in the fourth quarter (October to December). Although the new KEPCO CEO Kim Dong-cheol previously claimed that an electricity rate increase of 25.9 won per kWh was necessary in the fourth quarter, there were counterarguments that a decision to increase the rate in the fourth quarter would not be easy due to concerns that it might stimulate high inflation and the political situation with the general election imminent. It appears that the company’s position is narrowing. In addition to the existing criticism that the financial resources that can be reduced through KEPCO’s self-rescue efforts are limited, results were revealed that the effect of implementing the highly anticipated ‘SMP cap system’ was not significant.
People Power Party lawmaker Kim Seong-won, a member of the National Assembly’s Trade, Industry, Energy, Small and Medium Venture Business Committee, cited data submitted to the Korea Power Exchange and said, “The electricity purchase cost reduced by KEPCO through the application of the SMP cap system, which was introduced in December last year and implemented in January, February and April of this year, is “1.3101 trillion won,” it was reported on the 8th. During this period, KEPCO’s power purchase cost was KRW 31.2506 trillion. Assuming that the SMP cap system was not in effect, KEPCO’s purchase cost burden estimated by the Korea Power Exchange was KRW 32.5606 trillion. In the end, it was a ‘minor savings’ to resolve KEPCO’s accumulated deficit of 47 trillion won and debt of 200 trillion won.
The SMP cap system is a system that regulates the purchase price at which KEPCO purchases electricity from power generation companies by law so that it does not exceed ‘1.5 times the market average for the past 10 years.’ Although power generation companies protested once morest the structure in which power generation companies’ profits decrease as KEPCO reduces the purchase price, it was introduced at the end of last year as criticism grew that without this regulation, KEPCO’s debt would become excessively large during the global energy price hike.
Even though measures were taken to increase electricity rates by 21.1 won per kWh in the first and second quarters, including selling assets and implementing an SMP cap system, KEPCO’s operating performance in the first half of the year was 8.45 trillion won in deficit. If debt continues to accumulate in this way, it is expected that it will become increasingly difficult to raise funds through the issuance of KEPCO bonds in the future. Accordingly, some are pointing out that the fourth quarter electricity rate increase is in fact the only option. However, that time is expected to be following KEPCO’s additional self-rescue measures are announced in early to mid-November.
Sejong Reporter Kang Ju-ri
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#electricity #rate #dilemma #raised #won뉴스 #분석
