Korean energy minister hints at significant increase in electricity bill

Minister of Trade, Industry, and Energy Lee Chang-yang [Sources : MK and Yonhap]

The Korean energy minister on Thursday hinted at a significant hike in electricity bill for next year to help the country’s monopolistic state-run utility firm Korea Electric Power Corp (KEPCO) reduce loss, but at the level that can minimize burden on low-income households.

“It is better to allow a significant increase in (electricity bills) in the first half (next year) for the sake of KEPCO’s loss reduction, but we also have to consider that the winter season has already began and expensive electricity cost in the cold season could be too harsh to low-income households,” Minister of Trade, Industry, and Energy Lee Chang-yang told the press on Wednesday.

His comment comes as the ministry plans to decide the energy bill hike for next year this week. It is likely for the ministry to announce the rate of increase for the January-March period of 2023 on Friday, the last working day of this year.

The hike plan has yet to pass the reviews by the KEPCO’s board of directors and the electricity regulatory commission under the energy ministry. Once the reviews are done, the energy minister will make the final approval.

According to a report prepared by the energy ministry for the legislature, it is necessary to increase the electricity bill by 51.6 won ($0.04) per kilowatt-hour next year to normalize KEPCO’s financial conditions. The state utility firm is expected to report nearly 30 trillion won loss in 2022. The rate increase would be 2.7 times higher compared to this year.

In response to the ongoing energy crisis triggered by Russia’s invasion of Ukraine, the Korean government is seeking to expand the use of nuclear power generation while growing the renewable energy sector.

South Korea has set a goal to generate 21.6 percent of the country’s power through renewable sources, such as solar farm and wind park. But Lee said offshore wind farm would be a better option than solar farm to Korea, which is a peninsula country.