Gas and Electricity Bills to Rise on Average 7,400 Won a Month for a Four-person Household Starting May 16

Minister of Trade, Industry and Energy Lee Chang-yang announces the government’s adjustment of power and gas fees in the second quarter of 2023 along with government support for the vulnerable at the government office in Seoul on May 15. Mun Jae-won

The government will raise electricity and gas prices by 5.3% each beginning May 16. The latest hike will add the burden on citizens by an average of 7,400 won based on a four-person household.

The Ministry of Trade, Industry and Energy announced that it would increase the price of electricity by 8.0 won per kilowatt hour (kWh) beginning May 16. This is a 5.3% increase from the current rate. A four-person household that uses 332 kWh of power a month can expect to see their power bill increase by 3,000 won a month compared to the rates at the beginning of this year. The power bill is expected to increase by 2,090 won for a one-person household (230 kWh), 2,640 won for a two-person household (289 kWh), and about 2,700 won for a three-person household (298 kWh).

The gas charge will also increase by 1.04 won (5.3%) per megajoule (MJ) beginning Tuesday. When we consider the average amount of gas used in a four-person household (3,861 MJ), the gas bill is expected to jump by 4,400 won a month on average.

The government explained that the latest utility fee hike was due to the surge in international energy prices. Energy Minister Lee Chang-yang explained the latest changes in power and gas fees to the nation from the government office in Seoul Monday and said, “International energy prices, which soared after the war between Russia and Ukraine, are somewhat stabilizing, but they are still higher than the average year.” The price of liquified natural gas (LNG), which determines the wholesale electricity price, jumped 33.3% in the first quarter this year from a year ago.

The Korea Electric Power Corporation (KEPCO) and the Korea Gas Corporation (KOGAS) are struggling with losses due to high-flying energy prices. KEPCO, which recorded operating losses of over 30 trillion won last year, recorded losses of 6.2 trillion won in the first quarter this year. KOGAS also witnessed its outstanding balance increase by nearly 2.3 trillion won to reach nearly 14.3 trillion won in Q1 from 12.02 trillion won at the end of last year. The outstanding bill refers to the balance left after taking away the amount of gas bills collected from the amount of natural gas import prices. When general accounting standards are applied, the outstanding balance shows the amount of losses that the corporation suffers.

On Monday, the government released measures to ease the burden on the socially vulnerable along with the announcement of utility price hikes. The government will defer the application of higher prices for up to the average amount of power and gas used by people vulnerable to utility fee hikes, such as those in the Basic Livelihood Security Program and those in an income bracket just above the bottom tier for one year. The government will also expand those eligible for energy vouchers from people sensitive to extreme temperatures among the recipients of basic livelihood and health care allowances to those among the recipients of basic housing and education services.

The installment payment for power bills, a policy that was only available for houses (residences), will be expanded to small business owners and Ppuri (root) corporations, and in the case of power used for agricultural purposes, the latest increase will be divided (by three) and charged over the next three years. The energy cashback policy--provided when people save energy, using less than the average--will also be expanded, with deductions of up to 100 won per kWh of power when people save 20% or more electricity.