[2022 National Audit] Chae Hee-bong, Gas Corporation CEO, "SMP Cap System Must Be Implemented to Prevent Electricity Bill Burden"

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Dongwoo Lee] = Chae Hee-bong, President of Korea Gas Corporation, stated on the 20th that a cap on the wholesale electricity price (SMP) should be implemented to prevent the burden of electricity bills on consumers.

President Chae made this remark during the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee's audit, responding to a point raised by Kim Yong-min, a member of the Democratic Party of Korea, who said, "The burden on Korea Gas Corporation is increasing due to cherry-picking behavior by private power producers, who engage in indirect sales and only introduce gas when prices are low."

Cherry-picking refers to the act of giving up direct imports when liquefied natural gas (LNG) prices are high. In this case, Korea Gas Corporation must purchase expensive LNG to secure the volume that direct importers have abandoned.

President Chae said, "Cherry-picking ultimately causes Korea Gas Corporation to buy LNG at high prices when prices are high, which leads to the problem of having to raise expensive city gas rates for consumers."

He added, "The issue of indirect sales undermines Korea Gas Corporation's ability to maintain its status as a wholesale business operator under the City Gas Business Act and to fulfill its public role. Some indirect sales operators engage in internal transactions with their affiliates or supply third parties who want direct imports."

President Chae explained, "Ultimately, the SMP cap system should be used to prevent the burden of electricity bills from being passed on to consumers, and the blind spots in the City Gas Business Act need to be revised. It is necessary to prohibit indirect sales or establish inspection procedures for direct imports."

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