Electricity Rate Hike Deferred in Q2... "Considering the Hardships of the People Due to COVID-19"

(Photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] The government and Korea Electric Power Corporation (KEPCO) have decided not to raise electricity rates for the second quarter (April to June). Although electricity rates were initially expected to increase due to rising international oil prices, this measure aims to stabilize the lives of citizens struggling amid the prolonged COVID-19 pandemic.

On the 22nd, KEPCO announced that the fuel cost adjustment rate for the second quarter of this year was set at -3.0 KRW per kWh, continuing from the first quarter. This is the second adjustment since the introduction of the cost-linked tariff system (fuel cost linkage system) earlier this year.

KEPCO has been implementing the "fuel cost linkage system" since the first quarter, which reflects the fuel cost fluctuations for electricity production using LNG, coal, and oil in electricity rates every three months. Accordingly, the quarterly electricity rate charging standards are disclosed by reflecting the fuel cost changes every three months.

Initially, the second quarter electricity rates were expected to rise inevitably due to the recent increases in international oil prices and LNG prices. Last month, the average international oil price based on Dubai crude was $60.89 per barrel, about 40% higher than the average of $43.42 per barrel in November last year. LNG prices also surged to around $24 per million BTU (British Thermal Units) at the beginning of the year. A KEPCO official explained, "We were notified by the government to apply -3 KRW per kWh. Although factors for adjusting the fuel cost adjustment rate arose due to rising international oil prices, the temporary surge in LNG prices caused by the unusual cold wave last winter was deferred from immediate reflection, aiming to stabilize the lives of citizens facing difficulties due to the prolonged COVID-19 pandemic."

The variable fuel cost, calculated by subtracting the standard fuel cost (289.07 KRW per kg) from the actual fuel cost (288.07 KRW per kg), is -1.0 KRW. Multiplying this by the conversion factor results in a fuel cost adjustment rate of -0.2 KRW per kWh. Applying this directly would reduce the discount compared to the -3 KRW reduction in the first quarter. Therefore, to ensure the stability of citizens' lives, the fuel cost adjustment rate for April to June was applied at the same -3 KRW as in the first quarter.

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