Electricity rate freeze continues as per PPP-pushed relief package

The ongoing freeze in electricity rates will be extended for over 3.6 million households as part of an economic relief package agreed upon by the government and the conservative People Power Party (PPP) on Sunday.

Prime Minister Han Duck-soo, third from right, speaks at a high-level meeting between government officials and the conservative People Power Party (PPP) at the National Assembly on Sunday. The PPP's interim leader Han Dong-hoon sits next to him, second from right. [YONHAP]

The ongoing freeze in electricity rates will be extended for over 3.6 million households as part of an economic relief package agreed upon by the government and the conservative People Power Party (PPP) on Sunday.

The decision was made during a meeting of senior government officials, the presidential office and the PPP at the National Assembly, according to Rep. Park Jeong-ha, PPP spokesperson.

According to Park, the extension of the electricity rate freeze is intended to provide relief for economically vulnerable groups ahead of the Lunar New Year holiday, known in Korean as Seollal, which falls on Feb. 10 this year.

The state-run Korea Electric Power Corporation (Kepco) had already announced a freeze in the electricity rate last month for the first quarter of the year, marking the third consecutive quarter without an increase for households and small businesses.

That decision was seen as being influenced by the upcoming general elections in April as the government tries to avoid placing additional financial burdens on households.

The retention of the current rates — despite the overall decline in global fuel prices — came amid the company’s continued struggle with its massive debt, which stood at 200 trillion won ($152 billion) last year.

Korea raised its electricity rates for five consecutive quarters beginning April 2022, pushing up electricity prices by 40.4 won per kilowatt-hour, or 39.6 percent, before freezing the price in June last year amid concerns over heavy household burdens and high commodity prices.

The freeze in electricity rate hikes is one of several measures in the package, which also includes a reduction in interest payments on loans taken out by small business owners and self-employed individuals from secondary financial institutions outside of the mainstream banking sector.

According to the PPP spokesperson, approximately 400,000 people will be eligible for a maximum reduction of 1.5 million won ($1,140) per person beginning in March.

The upper cap on the monthly total of goods that can be purchased with Onnuri gift certificates will also be raised from 1 million won to 1.5 million won.

Onnuri coupons are used to pay for goods at traditional markets and small shops for a discounted price.

The total value of Onnuri gift certificates issued will also be increased from 4 trillion won to 5 trillion won under the relief package.

Under the relief package, highway tolls will also be waived during the Lunar New Year holiday period from Feb. 9 to 12.

Tickets for the KTX and SRT high-speed trains will be discounted by up to 30 percent for people traveling from provincial regions to the capital area.

The Lunar New Year is when many Koreans journey back to their hometowns to gather with extended family, though the tradition has declined in recent years as an increasing number opt to take vacations abroad or take smaller family trips during the extended holiday period.

BY MICHAEL LEE [lee.junhyuk@joongang.co.kr]