KEPCO Submits Q3 Electricity Rate Increase Proposal to Government... Emphasis on Hike

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Dongwoo Lee] Korea Electric Power Corporation (KEPCO) will submit the third-quarter electricity rate increase proposal to the government on the 16th. Despite the burden of rising prices, the increasing management deficit makes KEPCO's electricity rate hike inevitable.

KEPCO plans to send an official letter containing the fuel cost adjustment unit price increase proposal to the Ministry of Trade, Industry and Energy (MOTIE) during the morning of the same day. It is highly likely that they will submit the maximum quarterly increase of 3.0 won for the fuel cost adjustment unit price.

Electricity charges consist of a basic fee, fuel cost adjustment unit price, standard fuel cost, and climate environment fee. Among these, the fuel cost adjustment fee reflects the fuel cost adjustment unit price, which can fluctuate quarterly.

The background for KEPCO's electricity rate increase is the sharp rise in power generation fuel costs such as coal, oil, and liquefied natural gas (LNG) due to ongoing global supply chain disruptions since last year and the impact of Russia's invasion of Ukraine. The electricity wholesale price (SMP) at which KEPCO purchases power from power producers recorded 202.11 won per kWh in April this year, surpassing 200 won for the first time in history.

As a result, KEPCO's deficit is also increasing. KEPCO sold electricity at prices lower than the SMP, recording a deficit of 5.8601 trillion won last year, followed by a loss of 7.7869 trillion won in the first quarter of this year.

A variable factor in the electricity rate hike is the steep rise in prices. With forecasts that the consumer price inflation rate will enter the 6% range, if the third-quarter electricity rates are raised, they will increase simultaneously with the scheduled gas rates next month, further increasing the household burden.

The third-quarter fuel cost adjustment unit price will be officially announced on the 21st by the Ministry of Trade, Industry and Energy, the relevant department, in consultation with the Ministry of Economy and Finance, the price authority, regarding whether to raise it.

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