By Lee Hyo-sik
Korea Electric Power Corp. (KEPCO), the state-run electricity supplier, said Friday that it will raise utility bills by an average of 4.9 percent as early as next week to improve its worsening balance sheet and help reduce power consumption. It also said it will hike electricity charges once again before the year’s end.
The utility firm said its board of directors held a meeting earlier in the day and decided to increase electricity costs in line with government recommendations. Industrial electricity charges will go up 6 percent, with the rate for household and agricultural uses rising by up to 3 percent.
In May, the firm had asked the government to allow it to raise utility bills by an average of 13.1 percent. But facing government opposition to a steep rate increase, it lowered the hike to 10.7 percent last month.
However, the Ministry of Knowledge Economy ordered KEPCO to keep rate hike below 5 percent, expressing concerns that the drastic increase could fan inflationary pressure.
``We will forward what our board of directors decided to the government today. We expect it to approve our proposal swiftly. The 4.9-percent hike will likely go into effect this month, a KEPCO official said.
``The planned 4.9-percent increase will not help us much in reducing our deficits. But we had no other choice but to follow government instructions.’’
KEPCO posted a net loss of 2.89 trillion won in the first six months of the year, up 48.3 percent from the same period last year. Its debts rose 9.2 percent to 54.98 trillion won in June from a year earlier.
Over the years, it has been forced to pay more for soaring oil, coal and other natural resources, as well as rising labor and other operating expenses. But KEPCO has been unable to reflect higher costs in electricity bills due to the government’s anti-inflation drive.
The company estimates its annual loss will likely reach 2 trillion won this year, down from last year’s 3.5 trillion won, thanks to the planned hike in electricity costs.
The 4.9-percent increase is said to be as effective as building a nuclear power plant capable of producing 1 million megawatts of electricity, meaning higher utility bills will discourage businesses and households from consuming electricity.
The official then said KEPCO will push for another rate increase ahead of the winter as the 4.9-percent hike is not enough to boost its bottom line and encourage consumers to conserve power. ``We will ask the government to allow us to raise electricity charges again before the end of this year.’’
In 2011, KEPCO increased utility charges by an average 4.9 percent in August and 4.5 percent in December.