"Electricity Rates Should Be Revised to Automatically Reflect Fuel and Environmental Costs"

Energy Transition Forum Hosts Discussion on 'Implementation Plans and Challenges for Electricity Rate Normalization'
Presentation by Professor Kim Young-san, Hanyang University

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] There has been a call to reform electricity rates so that both fuel cost fluctuations and environmental costs are automatically reflected.

Professor Kim Young-san of Hanyang University made this claim as a presenter at the discussion forum titled "Implementation Plans and Challenges for Normalizing Electricity Rates," hosted by the Energy Transition Forum on the 24th.

The forum was attended by Professor Kim, along with Professor Yoon Soon-jin of Seoul National University, Senior Research Fellow Lee Yusu of the Korea Energy Economics Institute, Specialist Seok Kwang-hoon of Green Alliance, Associate Research Fellow Kim Seon-gyo of the Korea Institute of Science and Technology Evaluation and Planning, Professor Lee Si-young of Korea Polytechnic University, Secretary-General Park Won-joo of the Private Power Association, and Research Director Lee Seo-hye of E-Consumer.

Professor Kim pointed out that Korea's electricity rate system is rigid to the extent that there have been no significant changes except for improvements in the progressive rate system.

He criticized issues such as the demand monopoly in the wholesale market and the improper application of demand by retail operators.

The electricity market is divided into wholesale and retail markets, where Korea Electric Power Corporation (KEPCO) purchases electricity from each power plant at wholesale prices through the Korea Power Exchange and then sells it to consumers.

KEPCO's long-standing goal of implementing a fuel cost linkage system can structurally resolve the rigidity of rates in response to fluctuations in raw material prices such as thermal coal and power generation costs.

However, there are limitations as the proportion of variable factors other than fuel costs, such as environmental costs, is increasing, and there remains a need for periodic revisions of the rate system.

Professor Kim said, "The electricity rate system should be improved so that both fuel cost fluctuations, such as fossil fuel costs, and environmental costs, including the Renewable Portfolio Standard (RPS), are automatically reflected in the rates."

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