South Korea is poised to raise industrial power rates as it urgently needs to address the ballooning losses of state power monopoly Korea Electric Power Corp. (KEPCO) without adding an additional burden for households grappling with a spike in inflation and interest rates.

Trade, Industry and Energy Minister Lee Chang-yang said on Monday that it is “inevitable” to raise power charges for industrial sites that consume electricity most during a meeting with top executives of the country’s major corporations. Attendees at the meeting included Samsung Electronics President Rhee In-yong, SK Supex Council President Lee Hyung-hee, and Hyundai Steel President Ahn Dong-il.

The energy ministry is discussing the scope and timing of the raise with the Ministry of Economy and Finance.

Lee urged corporate leaders to inspect the energy use of each business in preparation for possible energy supply shortages in winter. The Korean government aims to reduce national power use by 10 percent this winter by improving energy efficiency, added Lee.

Since manufacturers have long benefitted from low power prices, it makes more sense to raise industrial power rates first, Lee told to reporters earlier Monday.

KEPCO is looking at a colossal operating loss of around 30 trillion won ($21 billion) this year as import prices have further gone up since reporting 14.3 trillion won losses in the first half. The price of liquefied natural gas (LNG) used for generating electricity and heating homes has jumped five-fold this year to reach $55 per 1 million BTU in August and soft coal price quadrupled to $419 per ton. KEPCO was restricted in raising prices due to the impact on inflation.

The ministry is seeking to gradually change the electricity retail price system to improve the state utility’s financial health, said Lee, adding that greater support will be provided to businesses in their efforts to improve energy use efficiency.

By Song Min-geun and Cho Jeehyun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]