Electricity rate hike unlikely in Q3

People walk by air-conditioning units installed on the outdoor wall of a multi-story residential building in Seoul, May 15. Korea Times file

By Lee Kyung-min

The government will leave electricity rates unchanged for the third quarter, according to market watchers, Friday, due to souring public resentment concerning the soaring cost of living as well as the moderate stabilization of global energy prices. Also at play is higher energy demand expected in the summer, as well as election campaigning considerations ahead of next year's general election.

Korea Electric Power Corp., a state-run energy firm, said it submitted a report to the Ministry of Trade, Industry and Energy on the factors involved in setting the electricity rates for the July-September period. Included are global energy prices such as crude oil and liquefied natural gas. An announcement will be made on June 21.

This year's fee was raised by 13.1 won ($0.01) per kilowatt hour (kWh), and 8 won in the first and second quarters, respectively. This combined with three hikes last year has led to a 39 percent higher electricity fee.

KEPCO's deficit stood at 44 trillion won as of the first quarter.

Last quarter, the ruling People Power Party (PPP) and the government ended up delaying the decision on the electricity rate hike by a month, with KEPCO's CEO resigning in the process.

However, the third-quarter decision is expected on time, as indicated by Second Vice Minister of Trade, Industry and Energy Kang Kyung-sung.

He said on Wednesday that raising the electricity rate hike in the July-September period will be difficult.

“It will not be easy to raise the rates, given the burden to the public. The government has made great efforts to normalize electricity bills and raised them a lot over the past year,” he said. “Global energy prices have shown a steady downward trajectory. We will make a decision after reviewing oil, bituminous coal and wholesale gas prices.”

Last year, the ministry said at least 51.6 won per kWh increase will be needed for this year's electricity rate. But the vice minister said the figures may be lowered.

“The previous assessment can be revised depending on changes in the global energy price,” he said. “The final decision will be made reflecting all factors.”