9 out of 10 SMEs Say "Electricity Bill Levels Are Burdensome"

Announcement of the Results of the '2019 Survey on Energy Cost Burden in Small and Medium Manufacturing Industries'

[Asia Economy Reporter Kim Cheol-hyun] It has been revealed that 94.0% of small and medium-sized enterprises (SMEs) feel burdened by the current industrial electricity rates. On the 12th, the Korea Federation of SMEs (Chairman Kim Ki-moon) announced the results of the '2019 Energy Cost Burden Survey for Small and Medium Manufacturing Enterprises,' conducted on 300 small and medium manufacturing companies.

Regarding the electricity rate system reform, 90.0% of SMEs expected an increase in rates if off-peak rates were raised, and the proportion of companies that experienced operations during off-peak hours in the past year was 76.3%. The main difficulties caused by the increase in off-peak rates were cited as 'decline in price competitiveness due to rising production costs' (94.7%), followed by 'reduced production volume due to shortened operating hours during off-peak times' (5.3%).

To alleviate the energy cost burden, respondents suggested measures such as 'establishing a dedicated electricity rate system for small and medium manufacturing enterprises' (31.7%), 'reducing mid-peak and maximum load rates' (24.3%), and 'applying spring and autumn rates in June and November' (22.0%), indicating expectations that easing electricity charges for SMEs would relieve upward pressure on production costs.

Additionally, efforts to reduce energy costs (multiple responses allowed) were surveyed as follows: ▲ minimizing unnecessary equipment operation (85.3%), ▲ replacing outdated and low-efficiency facilities (31.3%), ▲ introducing energy storage systems (ESS) (4.3%). The main difficulties in cost reduction were reported as 'continued rise in industrial electricity rates' (62.0%), 'inevitability of 24-hour operation due to equipment characteristics' (10.3%), and 'unpredictable order patterns from clients' (9.3%).

Regarding experience with government support programs, 91.7% had no participation experience, with the biggest reason being 'unaware of support policies (or learned too late)' (41.8%). The policies desired from the government were 'alleviation of electricity cost burden for small and medium manufacturing enterprises' (88.7%), 'enhanced provision of support program information and education' (5.0%), and 'expanded funding support for high-efficiency equipment introduction' (4.7%).

Jung Wook-jo, Head of the Innovation Growth Division at the Korea Federation of SMEs, stated, "Amid worsening management conditions for SMEs due to domestic demand slump caused by COVID-19 and concerns over economic growth slowdown worldwide, there is a risk that the burden of electricity rates will increase due to the acceleration of energy transition." He added, "Currently, the Electricity Industry Infrastructure Fund charge, which accounts for 3.7% of electricity rates, is exempted only for startup manufacturing businesses, but it is necessary to temporarily expand this exemption to all small and medium manufacturing enterprises to reduce the burden caused by COVID-19."

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