Deputy Minister of Industry Targets Nuclear Phase-Out... "Energy Policy Needs 'Depoliticization'"

Vice Minister Park Il-jun Emphasizes Need for Electricity Rate Increase... "Considering All Options"
"KEPCO's Situation Can't Be Solved with Just 1-2 Measures... Rate Increase Magnitude and Timing Are Crucial"
Suggests Possible Reform of Fuel Cost Linkage System... "Can't Solve with Just 1-3 Won Increase"

Critical Minerals Supply Chain Review Meeting
(Seoul=Yonhap News) Park Il-jun, Vice Minister of the Ministry of Trade, Industry and Energy, is presiding over the 'Critical Minerals Supply Chain Review Meeting' on June 9 at the Astor Suite Room of Lotte Hotel in Sogong-dong, Seoul. 2022.6.9 [Provided by the Ministry of Trade, Industry and Energy. Resale and DB prohibited]
Photo by Park Il-jun
(End)


＜Copyright(c) Yonhap News Agency, unauthorized reproduction and redistribution prohibited＞

[Asia Economy Sejong=Reporter Lee Jun-hyung] Park Il-jun, Vice Minister of the Ministry of Trade, Industry and Energy, pointed out that the government failed to raise electricity rates in a timely manner due to the Moon Jae-in administration's nuclear phase-out policy. This is interpreted to mean that Korea Electric Power Corporation (KEPCO), which fell into a 'deficit swamp' due to soaring fuel costs while unable to raise electricity rates, is not unrelated to the nuclear phase-out policy. Vice Minister Park stated that he intends to consider all measures, including reforming the fuel cost linkage system, to resolve KEPCO's deficit.

Vice Minister Park made these remarks at a press briefing held on the 15th. He said, "There is certainly a structural vulnerability as the proportion of cheap power sources such as nuclear and coal decreased and the share of renewable energy increased due to the previous government's nuclear phase-out policy," adding, "Energy policy became politicized, which also led to reluctance in raising electricity rates."

Vice Minister Park emphasized the need to reconsider the pace of renewable energy expansion. Initially, the expansion of renewable energy was considered a core part of the Moon Jae-in administration's energy policy. He said, "When renewable energy increases, there are overall costs that must be borne," and added, "There is a sense of problem that renewable energy expansion may have been increased too much without sufficient consideration of these aspects." He further stated, "Compared to other countries, Korea is not in a favorable position to expand renewable energy," and added, "Now that the share of renewable energy has grown, it is time to consider the new costs to be paid, such as grid and backup facilities."

He also mentioned the need to 'depoliticize' energy policy. Vice Minister Park said, "Energy has become a political issue, which limits the government's ability to implement related policies," and added, "While establishing the new government's energy policy direction, it is necessary to resolve current issues such as electricity rates in the short term and also depoliticize energy policy."

He expressed his position to consider all available measures to resolve KEPCO's deficit. KEPCO posted a deficit of 7.8 trillion won in the first quarter alone due to soaring fuel costs such as international oil prices. This figure far exceeds last year's total deficit of about 5.9 trillion won. Vice Minister Park said, "I believe the current KEPCO situation cannot be resolved with just one or two measures," adding, "We are considering all possible methods." He continued, "Not only whether to raise electricity rates but also the extent and timing of the increase are important," and said, "Although there is a burden on inflation, the inflation authorities are fully aware that KEPCO's deficit is serious and could become a burden for future generations."

He also hinted at the possibility of reforming the fuel cost linkage system. The fuel cost linkage system is a mechanism that adjusts electricity rates by up to 3 won per kWh quarterly according to the import prices of energy sources such as crude oil and gas. Additionally, the government has limited the adjustment range under the fuel cost linkage system to a maximum of 5 won annually to stabilize prices. Vice Minister Park said, "The fuel cost linkage system was created with normal circumstances in mind," and added, "The KEPCO deficit cannot be resolved by raising rates by 1 to 3 won per kWh as it is now." He further stated, "The longer the electricity rate increase is delayed, the greater the burden and the harder it will be to resolve," and said, "We are continuously consulting with inflation authorities on the extent and timing of electricity rate increases while considering the inflation burden."

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