[2020 National Audit] "KEPCO Granted 10 Trillion Won in Discounts to Large Corporations Over 5 Years"

[Asia Economy Reporter Kim Bo-kyung] Criticism has been raised that the discount benefits of the industrial electricity time-of-use tariff plan provided by Korea Electric Power Corporation (KEPCO) are concentrated on large corporations. Over the past five years, KEPCO has provided more than 10 trillion won in tariff discounts to the top 50 power-consuming companies. It is pointed out that the burden is being shifted to small and medium-sized enterprises (SMEs) and general consumers.

On the 22nd, Kim Seong-hwan, a member of the National Assembly’s Industry, Trade, Energy, Small and Medium Enterprises and Startups Committee from the Democratic Party of Korea, pointed out during the national audit that the industrial electricity discount benefits are excessively concentrated on some large corporations.

According to an analysis of KEPCO data, the discount benefits received by the top 50 power-consuming companies through the time-of-use tariff plan over the past five years amounted to 10.028 trillion won. This was compared to the electricity charges they would have had to pay if the 50 companies had consumed power evenly across each load time period.

From 2015 to 2019, the top 50 power-consuming companies concentrated 54% of their electricity usage during off-peak hours, paying relatively low charges compared to their consumption. The top 10 companies are estimated to have received benefits exceeding half of the total discount amount of the top 50 companies, approximately 5.8 trillion won.

The company that received the most electricity tariff benefits was the steel manufacturer Hyundai Steel, which received 1.0752 trillion won in time-of-use discounts over five years. Samsung Electronics received 945.7 billion won, and POSCO also received 948.2 billion won, with the top three companies collectively securing about 3 trillion won in industrial off-peak electricity tariff benefits.

KEPCO has been revealed to be incurring huge losses by operating high-cost power generators to supply electricity. Lawmaker Kim pointed out, "To respond to excess demand, expensive peak power generators are operated, causing a loss of 20 won per unit in purchase cost while selling industrial electricity at a discount," adding, "This burden is essentially borne by SMEs and general consumers who use electricity during peak load hours."

While large corporations enjoy electricity tariff discounts, it was also pointed out that SMEs are using electricity at prices higher than residential rates.

Over the past five years, the electricity tariff rate for industrial use was 107.0 won/kWh, about 6 won cheaper than the residential rate of 113.1 won/kWh. However, when calculating the rate excluding the top 50 companies, the rate was 114.6 won/kWh, which is higher than the residential tariff.

This is because the discount rate during off-peak hours is set excessively high, resulting in industrial electricity discount benefits favoring large corporations that can easily adjust their operating hours and electricity consumption.

Lawmaker Kim criticized, "Most SMEs find it difficult to adjust their operating hours to receive electricity discounts, making it hard for them to benefit from the discounts," and added, "The current industrial electricity time-of-use tariff plan effectively causes SMEs to bear higher electricity costs to provide discounts for large corporations."

He urged, "Please carefully review the system design so that the industrial electricity tariff system does not become a special privilege for some large corporations but can provide benefits to SMEs."

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