A half-baked solution

The government has announced temporary relief for this summer’s residential electricity bills. But it has only vexed consumers. Although well-intended, the gesture won’t likely offer actual relief as it will save 20,000 won (＄17.85) per month at most and less than 10,000 won for most households. The government hurriedly came up with the program after President Moon Jae-in said, “Air conditioning should be regarded as a basic welfare necessity because public health and even lives depend on it.”

The comment raised expectations for a radical measure because even households that fared summer mostly without air conditioning could not survive a day without it because of the extreme temperatures through July and August. Some have already wrote in a Blue House online petition that they will boycott the condescending move.

Expecting major relief was wishful thinking, given the snowballing losses of utility firm Korea Electric Power Corp. (Kepco). In the first quarter alone, its operating losses reached 1.44 trillion won on consolidated basis. Its profitability deteriorated sharply because its reliance on nuclear reactors, which can generate electricity cheaply thanks to low production costs, fell to 50 percent from over 80 percent. It instead turned to more expensive fuel-powered generators that rely on expensive imported LNG.

As long as the government sticks to its stance to wean the country off nuclear reactors, Kepco’s bottom line will stay low. Cuts in power charges on top of its worsening financial sheet could disrupt the company’s annual 7 trillion won spending. If it does not invest in maintenance, repair and upgrading aging facilities, accidents could occur. Colossal deficits in public utility companes like Kepco must be covered with tax money. The government therefore could not axe the rate as much as it wanted to. The latest move will reduce the 276.1 billion won income for Kepco.

The reactor phase-out policy is the heart of the problem. Reactors are the only way for Korea to produce electricity cheaply and keep supply at a stable level without exposure to volatile import factors. Without reactors in our resource-poor country, heating and cooling cannot be provided as basic welfare for the people. If the government wants to provide heating and cooling as a basic necessity, it must reconsider its reactor phase-out policy.

JoongAng Ilbo, Aug. 9, Page 30