Rep. Yang Iwonyoung Proposes Regional Differential Electricity Tariff Act

[Asia Economy Reporter Oh Ju-yeon] Yang Iwon-young, a member of the Democratic Party of Korea (National Assembly Industry, Trade, Small and Medium Venture Business Committee), has proposed the "Electricity Business Act Amendment" aimed at reflecting regional supply cost differences in electricity rates into retail prices.

[Image source=Yonhap News]

The amendment specifies that when electricity retailers determine matters related to electricity rates, the basic supply terms and conditions must consider ▲the distance between power plants and electricity users ▲electricity supply costs due to generation, transmission, transformation, and distribution ▲voltage and power reserve rates.

Since gasoline and water supply fees have regional price differences, and city gas rates also reflect supply cost differences leading to regional price variations, Yang explained that electricity rates should also reflect regional supply cost differences in retail prices to send price signals to consumers.

Yang explained, "While electricity consumption in the Seoul and Gyeonggi regions accounts for more than 30% of domestic consumption, power plants that generate electricity are mainly concentrated in areas far from the metropolitan area." He added, "The imbalance between major electricity consumption areas and supply areas causes problems such as concentration of power plants in certain regions, excessive power transportation costs due to long transmission lines and high-voltage transmission towers, and social conflicts around power plants. However, under the current electricity rate system, these costs are not charged to the cost causers."

He stated, "The electricity rate structure, which does not properly reflect regional costs in electricity rates, has led to a distorted structure where thermal and nuclear power plants are concentrated in some regions," and added, "I hope the amendment to the Electricity Business Act will establish an institutional foundation for setting regionally differentiated electricity rates."

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