Expansion of Progressive Rate Bracket from 200 to 300 kWh... One-Year Postponement of Tariff Increase for Vulnerable Groups

Summer Cooling Cost Reduction Measures for Vulnerable Groups
Up to 6-Month Installment Payment for Small Business Owners
Expansion of Energy Voucher to 280,000 Households
Energy Cashback Up to 100 KRW per kWh

The government will postpone the application of electricity and gas rate increases for energy-vulnerable groups during the summer by one year and expand the scope of energy voucher payments. For low-income households, the progressive rate brackets will be gradually raised in July and August, and small business owners will be allowed to pay up to 50% of their monthly electricity bills in installments for up to six months.

On the 19th, the Ministry of Trade, Industry and Energy announced the "Summer Cooling Cost Reduction Measures for Vulnerable Groups." This proactive support plan aims to minimize the burden of summer cooling costs due to recent electricity rate hikes for energy-vulnerable groups.

Korea Electric Power Corporation is expected to have incurred a loss close to 5 trillion won in the first quarter of this year alone, as the announcement of the electricity rate hike plan approaches. Although the 'electricity rate hike announcement on the 11th' has been postponed for now, there is a consensus inside and outside the government on the inevitability of the rate increase, so it is unlikely to take long until the final decision is made. The photo shows an electric meter in a residential area in Seoul on the 11th. Photo by Hyunmin Kim kimhyun81@

Progressive Rate Bracket Expanded from 200 to 300 kWh... Energy Voucher Increased

First, the number of households eligible for energy voucher support was expanded by 32.4%, from 857,000 to 1,135,000 households. In addition to households receiving livelihood and medical benefits, the scope now includes those receiving housing and education benefits, as well as heat- and cold-sensitive groups such as the elderly, disabled, infants, and pregnant women. The support amount was also increased from the previous 40,000 KRW to 43,000 KRW, a 7.5% increase. This marks an additional increase just one year after raising the support amount from about 9,000 KRW at the beginning of last year to 40,000 KRW.

Welfare discount support for electricity and gas bills will also be strengthened. The application of electricity rate increases will be postponed for one year for socially vulnerable groups such as basic livelihood security recipients, near-poverty groups, and the disabled. However, if the average electricity consumption of welfare discount recipients last year (313 kWh) is exceeded, the increased rate will be applied. Regarding gas rates, an appropriate level is being reviewed considering this year’s increase and the amount used for winter season discounts last year.

Not only vulnerable groups but also low-income households and small business owners will see eased burdens. To reduce the summer cooling cost burden for low-income households, the progressive rate brackets will be expanded in July and August. The brackets will increase as follows: Stage 1 from 200 to 300 kWh, Stage 2 from 400 to 450 kWh, and Stage 3 from 401 to 451 kWh. Small business owners will be allowed to pay more than 50% of their monthly electricity bills from June to September and pay the remaining balance in installments over 3 to 6 months. Specific plans for gas rates will be developed after consultation with retail city gas companies and are scheduled to begin in October. The increase in agricultural electricity rates will also be applied in installments at one-third of the increase over three years, and additional cooling cost support for social welfare facilities such as senior centers will be considered. The government plans to cooperate with metropolitan and provincial education offices to provide additional support for school cooling costs.

Efforts will also be made to improve energy efficiency. An additional 1,500 high-efficiency air conditioners and 3,000 boilers will be provided to low-income households. To this end, the related budget was increased from 91 billion KRW to 99.6 billion KRW, benefiting a total of 495,000 households. The government also allocated 13.92 billion KRW this year for high-efficiency appliance purchases by vulnerable groups and 10.57 billion KRW for LED distribution subsidies. For small business owners, support will be provided for replacing equipment with higher energy efficiency, and energy savings during peak electricity times will be compensated. Additionally, a budget of 8.46 billion KRW will be invested to conduct free energy diagnostics for 1,000 apartment complexes and 50 gosiwon (small lodging houses) nationwide.

Cashback Expanded up to 100 KRW per kWh... Encouraging Savings by Citizens and Companies

The government is also strengthening incentives to reduce and improve the efficiency of energy consumption by companies. The Ministry of Economy and Finance will apply accelerated depreciation of up to 75% for small and medium-sized enterprises and 50% for large companies on energy-saving facilities acquired this year, and provide temporary investment tax credits to companies making efficiency investments. Accelerated depreciation means faster depreciation. An official from the Ministry of Trade, Industry and Energy explained, "By allowing more cost processing for energy efficiency investment facilities in the initial year, corporate tax reductions can be expected."

The amount of loans provided to companies installing energy-saving facilities will also be increased. The Ministry of Trade, Industry and Energy plans to raise the support ratio from 90% to 100% for small businesses and from 70% to 80% for medium-sized enterprises. The minimum application amount of 20 million KRW has also been eliminated. In addition, the Ministry of Environment will provide loans for eco-friendly facility investments, and the Ministry of SMEs and Startups will provide loans for small business facility investments.

To encourage individual energy savings, energy cashback will be significantly expanded, and real-time energy usage information will be provided. For electricity bills, starting in July, incentives will be increased up to 100 KRW per kWh based on the reduction rate, and for gas bills, starting in December, the cashback incentive criteria for households will be relaxed from the current reduction rate of 7% or more to 3-5% or more. From this month, real-time electricity usage, billing, and advance notifications for exceeding progressive rate brackets will be provided, and from June, advance notifications of estimated bills will be offered.

The government will continue the nationwide energy-saving campaign "Reduce 1 kWh a Day," which began in March. An official from the Ministry of Trade, Industry and Energy stated, "We will jointly promote energy-saving campaigns with local governments, such as guidance on cooling with open doors, and publicize efficiency improvement support projects through various media with cooperation from related ministries."

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