Ministry of Industry Approves Individual Tariff System for Natural Gas Power Generation... Expecting Reduction in Power Generation Costs

[Asia Economy Reporter Kwangho Lee] The Ministry of Trade, Industry and Energy announced on the 3rd that it has approved the amendment to the natural gas supply regulations for the implementation of the individual tariff system for power generation, which was submitted by Korea Gas Corporation on December 30th last year after approval by the board of directors.

The individual tariff system is a scheme that applies different liquefied natural gas (LNG) prices for each power plant in connection with individual import contracts concluded between the Gas Corporation and power plants.

Previously, the average tariff system was applied, which averaged all LNG prices under the import contracts concluded by the Gas Corporation and applied the same LNG price to all power plants.

The individual tariff system will be implemented for new power plants from January 1, 2022, and for power plants whose existing supply contracts with the Gas Corporation have expired. Eligible power plants can negotiate supply applications with the Gas Corporation starting this year.

The Ministry of Trade, Industry and Energy expects that the individual tariff system for power generation, implemented after government approval, will enhance the efficiency of the gas import market and strengthen fair competition within the electricity market.

An official from the ministry stated, "By allowing power generation companies to choose cheaper fuel procurement between direct import and the individual tariff system, the overall LNG import cost for the country will decrease," adding, "Competition to reduce fuel costs among power companies will be strengthened, which will contribute to lowering Korea Electric Power Corporation's power purchase costs and electricity bills for the public."

He continued, "While direct import volumes are difficult to manage in terms of supply and demand at the national level, the individual tariff system volumes can be managed integrally by the Gas Corporation," and predicted, "This will also enhance the response capability to national emergencies such as sudden surges in electricity demand."

This content was produced with the assistance of AI translation services.