[Graphics by Song Ji-yoon]
The government granted Korea Electric Power Corp. (KEPCO) to raise electricity bill for the first time in eight years in the fourth quarter to improve the state utility’s worsening financial balance due to the years-long freeze and higher burden for costly renewable energy sourcing.
KEPCO announced on Thursday that it plans to end the 3-won ($0.0024) discount per kilowatt-hour as of Oct.1, which has been applied since January this year. Under the new rate, a four-member household consuming an average of 350 kWh per month will pay up to 1,050 won extra each month.
The change would make the first raise in electricity bill since November 2013.
Shares of KEPCO closed 1.22 percent lower at 24,200 won on Thursday.
KEPCO adopted a new flexible electricity billing system starting this year in a move to stabilize its profitability under which the electricity rate is revised by up to 3 won per kWh every three months depending on changes in fuel expenses and additional coal phase-out costs.
The Korean government and the utility provider, however, had kept electricity bills unchanged for the second and third quarters this year in reflection of ongoing Covid-19 setbacks and concerns over the build-up of inflationary pressure.
The six-month-long freeze had significantly hurt the state utility’s bottom line, causing it to swing to a net loss of nearly 700 billion won in the April-June period. Its fuel and power purchase costs jumped 8.1 percent on year during the period to 1.28 trillion won, but the electricity sales revenue inched up a mere 1.0 percent. The government expects KEPCO and six other power generators will suffer losses worth 4 trillion won this year.
The latest rate adjustment has been unavoidable, considering the fuel prices which nearly doubled against a year ago and the need to secure long-term funds to accelerate coal phase-out while guaranteeing stable power supply.
KEPCO’s coal phase-out costs to meet the renewable portfolio standards (RPS) had jumped each year from 1.41 trillion won in 2016 to 2.24 trillion won in 2020. As of end-June this year, it paid a total 1.67 trillion won.
The utility fee gain will further add to the inflationary pressure already building in the Korean economy.
The country’s consumer prices already jumped more than 2 percent for the fifth straight month in August, surpassing the central bank’s inflation target.
By Lee Soo-min
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]