"Create Independent Regulatory Agency to Adjust Electricity Tariff System"

[Asia Economy Reporter Moon Chae-seok] There has been a call to change the electricity rate adjustment system, which requires government approval by Korea Electric Power Corporation (KEPCO). The proposal is to create an independent regulatory agency to enhance responsiveness to cost fluctuations.

Professor Yoo Seung-hoon of the Department of Energy Policy, Graduate School of Energy and Environment, Seoul National University of Science and Technology, made this argument at a forum titled "How Should Electricity Rates Reflect Climate and Environmental Costs?" hosted by the Energy Citizens' Coalition on the 13th.

Professor Yoo presented on the topic "Problems and Improvement Measures of the Current Electricity Rate System from the Perspective of Climate Change Response."

He pointed out the "rigidity" of Korea's electricity rate adjustment system as a problem and argued that a third-party institution with independence and objectivity should review and decide on electricity rates.

He explained that through this, a cost-based rate system could be established by introducing mechanisms such as the "retail-wholesale price linkage system" and the "fuel cost linkage system."

Professor Yoo said, "If international oil prices fall like this year and KEPCO makes a profit, electricity rates can be reduced; if the opposite happens, rates can be raised. It does not have to be changed monthly but should be structured quarterly, about one to two times a year."

He also argued that electricity consumption should be rationalized by improving the electricity rate system to reflect social costs such as environmental costs.

The proposal is to separately disclose climate and environmental-related costs to provide transparent information to consumers.

Currently, some environmental costs are included in electricity rates through fuel tax burdens, greenhouse gas emission charges, and renewable energy obligation charges, but the reflection is insufficient and separate notifications are not provided.

Professor Yoo said, "Unnecessary special discount rate plans should be reduced, and if necessary, a 'Green Rate Plan' that allows consumers to pay more for renewable energy should be considered. For all this to be smoothly implemented, governance must be established."

In the short term, Professor Yoo suggested granting the Electricity Commission the authority to decide electricity rates and strengthening the independence of its members and roles. Later, he proposed expanding and reorganizing the Electricity Commission into an independent Energy Regulatory Commission to verify energy cost structures and determine rate levels for electricity, gas, heat, and other energy sources.

A view of the headquarters of Korea Electric Power Corporation located in Naju, Jeollanam-do. (Photo by Korea Electric Power Corporation)

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