Increased Burden from Seoul Subway Electricity Fare Hike Causes Anxiety and Worry

Electricity Bill Increase Expected to Raise Construction Electricity Costs by 50.2 Billion KRW (26.7%) Year-on-Year...Electricity Usage Down 0.72% Until August Compared to Same Month Last Year, but Electricity Bills Up 28.28%

Seoul Metro announced that the increase in electricity rates by Korea Electric Power Corporation (KEPCO) is adding to the financial burden of the corporation operating Seoul Subway Lines 1 to 8 and Lines 9 Phase 2 and 3.

The corporation transports over 7 million passengers daily and consumes a significant amount of energy, accounting for 2.92% of Seoul's total electricity usage, making the burden of electricity rate hikes substantial.

The corporation expects that the electricity bill payable to KEPCO this year will reach 238.5 billion KRW, an increase of 50.2 billion KRW (26.7%) compared to 2023 and 65 billion KRW (37.5%) compared to 2021. In 2022, the electricity bill was 188.3 billion KRW, which was 14.8 billion KRW (8.5%) higher than in 2021.

Since April 2022, KEPCO has raised the unit price per kWh and increased the climate environment charge and fuel cost adjustment charge included in the electricity bill, resulting in a total increase of 44.9 KRW per kWh. Due to this electricity rate hike, an increase of 50.2 billion KRW is expected in 2023 compared to the previous year. Additionally, a further 5 billion KRW burden is anticipated if the electricity rate increases by another 10 KRW.

In 2022, the operating revenue from Lines 1 to 8 operated by Seoul Metro was approximately 1.3 trillion KRW, of which electricity costs (about 190 billion KRW) accounted for 14.6%.

The corporation has been conducting company-wide energy-saving campaigns, including the introduction of high-efficiency trains and efficient operation of air conditioning systems, to prepare for the electricity rate increase. As a result, electricity consumption from January to August this year was reduced by 6,267 MWh (0.72%, 1.12 billion KRW) compared to the same period last year. However, the electricity bill burden increased by 28.9 billion KRW (28.28%) compared to the same period last year.

It is now difficult to further strengthen energy-saving activities. This is because, following the end of COVID-19, the number of passengers transported from January to August 2023 increased by 12.8% (182 million people) compared to the previous year, and electricity consumption is rising due to the increase in various convenience facilities such as platform equipment.

Additionally, KEPCO changed the electricity rate category for railway operators from the relatively cheaper industrial (Category A) to industrial (Category B) in 2012. Although KEPCO provided discounted electricity rates until 2017 considering the difficulties faced by railway operators, the discount period has now expired, and the corporation, as a railway operator, bears the higher rates as is.

With electricity rates rising as scheduled and the rate category switching to a more expensive one, it is difficult to alleviate the accumulated burden solely through subway fare increases.

Since the 7th of this month, the basic fare for metropolitan area subways has increased by 150 KRW to 1,400 KRW. This is the first subway fare increase in eight years. Due to the fare freeze over the past eight years, the burden of operating deficits has accumulated, and efforts alone have limitations in resolving this burden.

In fact, KEPCO offers electricity rate discounts to public service sectors such as elementary, middle, and high schools and kindergartens (6%), slaughterhouses (20%), and solar salt and rice processing plants (20%). If similar discounts were applied to railway operators providing essential public services, the corporation could also reduce its electricity cost burden.

To provide high-quality public services, the corporation urgently needs KEPCO to introduce a dedicated electricity rate system for railway operators or provide discount benefits.

Baek Ho, CEO of Seoul Metro, stated, “Due to the subway fare freeze over the past eight years, the corporation has been facing poor financial conditions. The increase in electricity rates is further intensifying the financial burden, and the effect of subway fare increases is being overshadowed by the electricity rate hikes. Therefore, the introduction of a dedicated electricity rate system or benefits for railway operators providing essential public services is necessary.”

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