Korea's residential, industrial electricity and gas bills to rise from October

[Photo by Lee Seung-hwan]

South Korea’s household and industrial electricity tariffs will go up starting next month to reflect some of recent energy price hikes that have taken a heavy toll on state-run utility firm Korea Electric Power Corporation (KEPCO).

KEPCO said Friday that it will raise residential electricity charges by 2.5 won per kilowatt-hour (kWh) in October. This will be an additional increase to a rise of 4.9 won per kWh that KEPCO previously announced to apply next month under legal allowance. As a result, a four-member household is expected to pay 2,270 won ($1.59) more per month for their energy bills.

KEPCO is also raising electric charges for industrial and business uses, but rates will differ per voltage use. Electricity tariffs for industrial use will go up by 7.0-11.7 won per kWh next month, meaning business should pay 11.9-16.6 won more per kWh.

The electricity bill hike decision comes as the Korean government shares the concern of KEPCO over its mounting losses stemming from the rigid energy tariff system that has prevented KEPCO from raising energy charges despite soaring energy costs.

On Thursday, Prime Minister Han Duck-soo told said “A hike in electricity tariffs is necessary” in response to reporters’ question whether the household energy bills should follow the principle of market economy, adding that it is inevitable to increase electricity bills for the national energy strategy and security even though it pushes up inflation.

S. Korea"s Prime Minister Han Duck-soo. [Photo by Yonhap]

The local law allows KEPCO to raise the unit price of fuel cost by up to 5.0 won per kWh per year. The state utility firm already has used the annual limit in late June.

KEPCO has been asking to raise the unit price of fuel cost by 260 won per kWh to ease losses, estimated at most 35.4 trillion won for this year. A hike of 50 won per kWh would allow the company to break even in the fourth quarter.

The Ministry of Trade, Industry and Energy sought to raise the ceiling on increase to 10 won per kWh to allow KEPCO to increase residential electricity bill.

City gas price is also going up from next month.

The Ministry of Trade, Industry and Energy said Friday that city gas charges on residential use will be increased by 15.9 percent and on business uses by between 16.4 percent and 17.4 percent per business type. That means a household using 2,000 megajoules (MJ) will be charged 5,400 won more per month, including value-added tax.

On Friday, KEPCO shares gained 2.03 percent to close at 20,100 won.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]