Electricity Rates Likely Frozen in Q3... KEPCO Also Says "No Increase This Time"

Ministry of Economy and Finance: "Low Possibility of Increase in Q3"
Additional Increase Burden After Just One and a Half Months

The Ministry of Economy and Finance has confirmed that it has decided not to raise electricity rates for the third quarter (July to September) this year. Even within Korea Electric Power Corporation (KEPCO), it is seen as unlikely that rates will be increased in the third quarter.

On the 8th, a senior official from the Ministry of Economy and Finance said, "It is highly likely that electricity rates will not be raised in the third quarter."

Last month on the 15th, the government decided to raise the second quarter electricity rates by 8.0 KRW per kWh (kilowatt-hour). Due to prolonged discussions between the Ministry of Trade, Industry and Energy, the main ministry in charge, and the Ministry of Economy and Finance, which oversees price stability, followed by the ruling party-government council's decision on energy price hikes, the implementation date was delayed by one and a half months from April 1 to May 16. If electricity rates were raised again for the third quarter starting July 1, it would mean another increase just a month and a half after the previous one. Considering this situation, the Ministry of Economy and Finance has settled on freezing the third quarter electricity rates.

At the time of the second quarter electricity rate hike announcement, the Ministry of Trade, Industry and Energy also avoided giving a direct answer regarding the possibility of further increases within the year. On the 15th of last month, Lee Ho-hyun, Director of Power Policy at the Ministry of Trade, Industry and Energy, said at a briefing on electricity and gas rate hikes held at the Government Complex Seoul, "We are not making any presumptions," adding, "We will make a comprehensive assessment based on global energy price trends, the financial status of energy public enterprises, and the degree of improvement."

However, the Ministry of Trade, Industry and Energy, which has previously expressed the need for electricity rate hikes, is still withholding comments on whether to adjust rates in the third quarter. A ministry official said, "Raising electricity rates is always a difficult task," and added, "At this point, it is too early to discuss whether to raise rates, and we plan to consult once KEPCO submits data such as actual fuel costs." Although the ministry is leaving the possibility of a rate increase open, it views the likelihood as low.

The National Assembly is in a similar position. The second quarter electricity rate hike was finalized through ruling party-government consultations, but discussions on adjusting rates for the third quarter have not yet begun. A ruling party official stated bluntly, "Since the electricity rates were raised not long ago, we are not specifically considering the third quarter rates."

Electricity rates are adjusted quarterly. For the third quarter rates, KEPCO is scheduled to compile and submit the 'actual fuel costs' for March to May (the previous three months) to the government on the 16th of this month. Based on this, the Ministry of Trade, Industry and Energy, the Ministry of Economy and Finance, and other relevant ministries will review and decide on the rates. However, even within KEPCO, the possibility of a third quarter rate hike is considered slim. An industry insider said, "Due to the delay in the second quarter rate adjustment, there is a widespread sentiment within KEPCO that nothing will happen (no increase) in the third quarter," adding, "Moreover, after the difficult second quarter rate hike, the CEO resigned and self-rescue measures exceeding 40 trillion KRW were announced, so they will be cautious about repeating such a situation."

As the likelihood of freezing the third quarter electricity rates increases, it is expected to become even more difficult for KEPCO to escape its deficit. KEPCO recorded its worst-ever deficit of over 44 trillion KRW in the first quarter of this year. This is because the more electricity it sells, the more it loses. According to the Monthly Power Statistics Report, in March this year, KEPCO bought electricity at 173.3 KRW per kWh but sold it at 139.3 KRW, incurring a loss of 34 KRW per kWh.

On the 15th, when the government announced the adjustment plan to raise the electricity rate by 8 won per kWh starting tomorrow, an electricity meter was installed in a residential area in Seoul. Photo by Jinhyung Kang aymsdream@

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