By Kim Tae-jong
The Korea Electric Power Corp (KEPCO) said Friday that it will reform the current progressive electricity rate scheme amid growing complaints about bills that were too high as a result of the system.
“We plan to gradually decrease the rates and the number of brackets as the current mechanism fails to reflect the growing use of electricity,” an official from the state-run company said. “Although we have very low electricity rates, the current system has misled people to think their electricity bill was overly expensive.”
The system was implemented in 1973 due to a global oil crisis in a bid to decrease electricity use by charging higher rates for heavy users.
Under the system, electricity prices are set in six brackets with the maximum difference between the top and bottom rates at 11.7 times.
KEPCO is considering maintaining the tiered fee mechanism but gradually decreasing the number of brackets to three and the maximum difference between the levels to three times, the official said.
The reform plan comes as the system fails to reflect the growing electricity use from changing lifestyles and consumption patterns and has consequently imposed a larger financial burden on consumers.
After the unusually hot summer, a lot of consumers have recently received higher than expected power bills and complained to KEPCO.
The average household electricity use is 163 kilowatt-hours (kWh) but it soared to 240 kWh last year.
Despite the growing demand for electricity, the nation has used the progressive fee system without reform since 2004.
The current system also aims to support people from low-income brackets as they are believed to use less electricity and consequently receive smaller bills.
But according to KEPCO’s recent survey, low earners account for only 10 percent of the bottom tier while single-person households and non-residential customers make up 42 percent each.
“Instead of supporting those in the low-income bracket, the system sometimes lets them pay higher power bills, especially in winter when they use electric heaters,” the official said.
After easing electricity rates, KEPCO will implement a discount policy for those with low incomes.