Decision to Raise Electricity and Gas Rates... Focus on Minimizing Burden

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Dongwoo Lee] As the government has decided to raise electricity and gas rates, it plans to minimize the increase to alleviate the burden on low-income households.

On the 19th, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho held the 1st Emergency Economic Ministers' Meeting at the Government Seoul Office and hinted at an increase in electricity and gas rates.

Deputy Prime Minister Choo explained, "Due to the sharp rise in international energy prices, the burden of production costs for electricity and gas rates has increased. We will minimize the increase through painful self-help efforts."

The background for deciding to raise electricity rates is Korea Electric Power Corporation (KEPCO) recording its largest-ever deficit this year. KEPCO already posted an operating loss of 7.7869 trillion won in the first quarter alone, surpassing last year's total deficit of 5.8601 trillion won.

KEPCO requested the government to raise electricity rates by 3.0 won per kWh (kilowatt-hour) in the third quarter. It is also undertaking self-help efforts such as improving management efficiency, reducing fuel costs, selling equity stakes, and disposing of real estate.

City gas rates will also increase. According to Korea Gas Corporation, starting next month, the raw material cost settlement price for residential and general-use gas rates will rise by 0.67 won to 1.90 won per megajoule (MJ, a unit of gas heat quantity).

City gas rates consist of the 'raw material cost' (standard raw material cost + settlement price), which is the import price of liquefied natural gas (LNG) used as fuel for power generation, and the 'wholesale and retail supply cost,' which includes supply costs and investment returns of wholesale and retail suppliers. This time, the raw material cost settlement price is being increased. The settlement price was raised from 0 won to 1.23 won in May and is scheduled to increase further by 0.40 won from 1.90 won to 2.30 won in October.

The government plans to minimize the increase in electricity and gas rates and freeze other public utility charges.

The public utility charges to be frozen include road tolls (Korea Expressway Corporation), railway fares (KORAIL and SR), postal fees (Korea Post), metropolitan water supply fees (Korea Water Resources Corporation), and vehicle inspection fees (Korea Transportation Safety Authority).

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