Simultaneous Electricity and Gas Price Increase Next Month... Additional Monthly Burden of 3,700 Won per Household (Comprehensive)

Fuel Cost Adjustment Unit Price for Q3 Confirmed Up 5 KRW per kWh
Electricity Bill for 4-Person Household Up 1,535 KRW... Government Says "Increase Unavoidable"
Average Monthly Gas Bill per Household Expected to Rise 2,220 KRW

The electric meter installed in a residential area in Seoul on the 19th, as the announcement on whether to raise electricity rates approaches. With prices of essential goods and energy soaring across the board, and even public utility charges such as electricity, water, and gas increasing, these have become major causes of rapid inflation, deepening the concerns of inflation authorities. If the government accepts Korea Electric Power Corporation's request for an electricity rate hike, there are concerns that the consumer price inflation rate, which has already recorded mid-5%, could exceed 6%. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Sejong=Reporter Lee Junhyeong, Sejong=Reporter Lee Dongwoo] Starting next month, electricity and gas rates will increase simultaneously. It is expected that households will bear an additional average monthly cost of 3,700 KRW. Concerns are rising for vulnerable groups as the over 6% inflation rate coincides with public utility fee hikes.

The Ministry of Trade, Industry and Energy announced on the 27th that from the 1st of next month, electricity rates will increase by 5 KRW per kWh (kilowatt-hour). A four-person household using 350 kWh per month will have to pay about 1,535 KRW more. The maximum adjustment range for the fuel cost adjustment unit price was raised from 3 KRW to 5 KRW due to the rise in international energy prices for crude oil, gas, coal, and other fuels used to generate electricity.

The government's decision to raise the third-quarter fuel cost adjustment unit price by 5 KRW, exceeding the quarterly maximum increase of 3 KRW, is due to Korea Electric Power Corporation's (KEPCO) "snowballing deficit." Initially, KEPCO calculated the third-quarter fuel cost adjustment unit price increase at 33.6 KRW per kWh. Given the sharp rise in fuel costs, it was judged that the adjustment unit price for the third quarter needed to be raised by at least 33 KRW per kWh to avoid selling electricity at a loss. However, KEPCO submitted a proposal to the government to increase the fuel cost adjustment unit price by only 3 KRW per kWh, applying the quarterly adjustment limit regulation.

The government considered increasing the third-quarter fuel cost adjustment unit price within the annual adjustment limit of 5 KRW. Accordingly, KEPCO prepared a revision to its terms and conditions allowing quarterly adjustment limits to be adjusted within the annual limit and applied for government approval. The government approved KEPCO's revised terms and conditions and finalized the plan to raise the third-quarter electricity rate by 5 KRW per kWh.

An official from the Ministry of Trade, Industry and Energy explained, "Despite the severe situation with high inflation, the adjustment of the third-quarter fuel cost adjustment unit price was an unavoidable decision due to KEPCO's financial condition," adding, "This is because international fuel prices surged, causing a significant factor for electricity rate increases."

Gas rates will also increase. The average monthly gas bill per household is expected to rise by 2,220 KRW.

The residential and general-use city gas rates will increase by 1.11 KRW per megajoule (MJ). This is the sum of the settlement unit price (0.67 KRW) confirmed by the government’s revision of the "Natural Gas Supply Regulations" last December and the increase in the base raw material cost (0.44 KRW).

With this increase, residential gas rates will rise 7% from 15.88 KRW per MJ to 16.99 KRW per MJ, and general-use gas rates will increase from 7.2% to 7.7%. The Ministry of Trade, Industry and Energy expects the average monthly gas bill per household in Seoul to increase from 31,760 KRW to 33,980 KRW, a rise of 2,220 KRW.

The government states that additional gas rate hikes are inevitable due to the sharp rise in international oil prices and natural gas spot prices since the second half of last year, as well as the soaring exchange rate. In fact, city gas rates are calculated based on the import price of liquefied natural gas (LNG). According to the Ministry of Trade, Industry and Energy, international oil prices and natural gas spot prices, which affect LNG import prices, have surged by 61% and 141%, respectively, over the past year. During the same period, the exchange rate rose by 14%.

However, discounts will be provided for vulnerable groups. KEPCO plans to temporarily expand the discount limit by 40% for about 3.5 million households eligible for welfare discounts from next month until September. Socially considerate groups such as persons with disabilities, national merit recipients, and basic livelihood security recipients will have their discount limits increased by the amount corresponding to the electricity rate increase due to the third-quarter fuel cost adjustment unit price hike. KEPCO will additionally raise the discount limit by 1,600 KRW for socially considerate groups, providing a maximum monthly discount of 9,600 KRW.

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