The current utility rate system picks ordinary consumers and overcharges them through the progressive scale that falls nothing short of absurd, and confirms how the government makes light of taxpayers.
Currently, the Korea Electric Power Corp. (KEPCO) is the state monopoly under control of the Ministry of Trade, Industry and Energy.
For the past 10 years, for the users of electricity for non-industrial purposes, which means ordinary households, the “unit” rate starts at 60.7 won or $0.05 for the first 100 kilowatt hours (kWh) to be used but it jumps 11.7 times in five progressive steps to reach 709.5 won at the top sixth level.
According to the state-run Korea Energy Economics Institute, a household of four keeps the air conditioner on for an average 3.5 hours per day or 179 kWh per month in the summer. If that household uses 53,407 won for 342 kWh per month for non-air-conditioning purposes, it would use 521 kWh in total with its bill soaring to 135,936 won. This means more than 82,000 won for the extra 179 kWh. For the eight hours, the extra charge would skyrocket to 316,566 won.
Law firm Ingang, which represents a growing number of consumers in collective damages suits, said that only 3 percent of consumers use less than 100 kWh and are not affected by the progressive rate. Now more than 2,400 consumers have applied, with 750 suits under way. Cases are pending in four courts with verdicts yet to come.
The government’s position is lamentable. First, the rate for industrial purpose is set at 81 won per kWh and exempt from progressive billing. This saves chaebol about 1 trillion won per year. Then, it sticks to the decades-old unreasonable assertion that the cancelation of the current system would be tantamount to a tax cut for the wealthy. Now, households using 300 kWh per month have jumped five times in 30 years to near 30 percent.
What raises more questions about the government’s motive is the fact that a discounted rate was applied last year, an admission that the current rates are unreasonable. Until February, the energy ministry repeatedly said that there would be discounts this year as well. But the plan was ditched without explanation afterwards as it conflicted with the ministry’s deregulation plan reported to President Park Geun-hye.
The point of conflict is about the introduction of “prosumers” that produce electricity through solar panels and sell the remainder after their individual needs are satisfied. This prosumer plan is based on the current rates that aim to reduce use. This whole affair shows the inconvenient truth that the government acts as its own interest group, with taxpayers and consumers being pushed to the margins. For that, it is important that taxpayers should be activists to protect their interest, taking the current utility rate as their first challenge.