Last Year, Sung Yoon-mo Advocated Caution on the 'Fuel Cost Linkage System'... "Considering Introduction"

"KEPCO Performance Must Be Stable and Predictable"

Minister Sung Yun-mo of the Ministry of Trade, Industry and Energy attending the 2020 National Assembly audit of the Ministry of Trade, Industry and Energy conducted by the National Assembly's Industry, Trade, and Small and Medium Venture Businesses Committee on the 7th, responding to questions from lawmakers. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok] Sung Yoon-mo, Minister of Trade, Industry and Energy, stated that he is considering introducing a fuel cost linkage system in the electricity rate reform plan. Although he expressed a cautious stance similar to last year, his remarks have drawn attention amid strong calls from Korea Electric Power Corporation (KEPCO) for the adoption of the linkage system.

Minister Sung appeared at the National Assembly's Trade, Industry, Energy, Small and Medium Business Committee hearing on the 7th and said, "KEPCO is deeply reviewing the introduction of a fuel cost linkage system in the new electricity rate structure reform plan, and the government is also watching this with interest."

This is interpreted to mean that there is a high possibility that the fuel cost linkage system will be applied in the electricity rate reform plan to be unveiled within this year.

Currently, electricity rates are determined regardless of fuel cost fluctuations, causing significant volatility in KEPCO's operating profits depending on international oil prices.

In response, KEPCO and the government are reviewing a plan to introduce a price ceiling system alongside the linkage system to partially reduce the reflection of oil price fluctuations.

On the same day, Shin Jeong-hoon, a member of the Democratic Party of Korea, pointed out that the structure of not properly reflecting costs in electricity rates could harm KEPCO's management stability and lead to consumption distortion, asking whether the linkage system could be introduced.

Minister Sung replied, "Since fuel cost is the biggest determining factor in electricity rates, it also affects KEPCO's performance," adding, "The necessity of reforming the electricity rate system was mentioned in the 3rd Basic Energy Plan, and since last year, we have been reviewing it with KEPCO to bring rationality to the electricity rate system."

Previously, at last year's National Assembly audit, Minister Sung said, "We will carefully review it considering the pros and cons."

At that time, he stated, "Although it can be operated efficiently linked to international oil price fluctuations, the volatility of public utility rates may increase and prices may continue to rise," adding, "We are not prejudging the introduction from the start but will proceed based on the results of careful review."

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