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| Electricity meters in Seoul. Korea times file |
By Lee Kyung-min
Record-high energy demand this winter sparked by the recent cold snap is further strengthening the case for electricity rate hikes in the coming weeks, market watchers said Sunday.
The gradual yet certain energy price hikes will add to the woes of many households in the form of increased living expenses in the broader context of accelerating inflation. The finance ministry said consumer prices will register a year-on-year increase of 3.5 percent next year, up 0.5 percentage point from projections announced in June. This year's electricity rate was raised by a combined 19.3 won per kilowatt-hour (kWh) in three separate hikes in April, July and October, up 20 percent from the year before.
The unwelcome circumstances are not in any way mitigated by the passage of a bill that will enable Korea Electric Power Corp. (KEPCO), the debt-ridden state-run energy firm, to issue corporate debt as much as five times the amount of its capital and reserves combined. Currently, it cannot issue more than double the amount of its capital and reserves combined. KEPCO has resorted to issuing top-rated, government-guaranteed AAA bonds to help offset its record operating losses widely expected to exceed 34 trillion won this year, far greater than the 30 trillion won projected a few months earlier.
KEPCO, the energy ministry and energy market watchers at large maintain that the electricity rates are and have been too low for too long, as controlled by the former Moon Jae-in administration, whose nuclear phase-out initiative squarely contradicted higher energy prices for the public.
Record-breaking power demand
According to the Korea Power Exchange, the country's maximum power demand logged an intraday high of 94,509 megawatts (MW) at 11 a.m., Dec. 23.
The figure was higher not only than the previous high of 92,995 MW, a day earlier, but also surpassed last year's intraday record of 97,708 MW.
Whether and by how much the energy authorities will increase the electricity rate remains to be seen.
KEPCO and the Ministry of Trade, Industry and Energy have repeatedly said the rate will be raised by least 50 won or up to 60 won per kWh to counter the operating loss of the state-run utility. Russia's invasion of Ukraine led to a spike in global energy prices, pushing up fuel import prices, in a bleak development for Korea which imports 93 percent of its energy.
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