[Viewpoint] Power hogs? Don’t look at our homesPresident Lee Myung-bak came down hard on the country’s monopoly power utility, Korea Electric Power Corporation, and distributor Korea Power Exchange after last week’s no-notice daytime blackout. He was so furious that he pounded the table while lashing out at executives from the power companies.
Lee saw with his own eyes the havoc a complete blackout causes in today’s society during his stay in Rome in September 2003, when he was Seoul’s mayor. The public, confounded and scared when they were stuck in traffic, elevators, and dark office buildings with no power, may have been pleased to see the top guys at the power suppliers get whipped.
But experts view the fiasco in a different light. They say censure and sacking will not make any difference. Former Kepco President Kim Ssang-su gave up his post as an LG Electronics adviser receiving 2 billion won ($1.7 million) a year to accept the chief executive position at the power company, where he received an annual salary of about 10 percent of that. He blames cheap utility prices as the fundamental problem behind the simmering energy crisis. Former Minister of Knowledge Economy Choi Kyung-hwan shares that opinion.
Gone are the days when campaigning for energy conservation worked. Dutiful families have been prudent in energy usage for about two decades now. Housewives check for efficiency standards certificates when shopping for electrical appliances and homes are built with good insulation. As a result, household electricity consumption has grown no more than 1.3 percent annually and usage matches the efficiency levels of advanced countries. A public campaign to unplug and switch off would be preaching to the choir.
The public and manufacturing sectors are the real culprits. Industrial electricity usage is priced at 87 won per kilowatt-hour, compared with 130 won for household use. To encourage industrial activity and exports, the government gives manufacturers power at rates below market cost.
Companies are too comfortable with cheap electricity to pay heed to calls to raise energy efficiency. The ratio of industrial power usage to total consumption is falling in other advanced economies, while the opposite is true in Korea. For instance, Japan’s industrial users consume 30 percent of electricity produced while Korea’s consume 54 percent.
The public sector, which consumes a third of power generated here, is equally heedless. While households think twice about turning on air-conditioners or heaters out of fear of the progressive rate structure, government buildings are unnecessarily cool in summer and warm in winter.
Satellite photos of the Korean Peninsula in nighttime show a brightly-lit South Korea, but the northern half is unrecognizable in almost total darkness. North Korea is short of electricity, but South Korea is extravagant in lighting.
Utility fees for farmers are half the price of industrial fees. No other countries warm greenhouses in winter time with electric heat. If the government is genuinely worried about supply levels that could lead to a total blackout, it should do something about the cost and stop nagging households that use just 14 percent of generated electricity.
Electricity is an expensive energy source, with an energy-transfer ratio of just 30 percent. But Koreans, thanks to their generous and inflation-obsessed government, think of it as the cheapest fuel around. Heavy oil and gas prices more than tripled over the last decade, but the total electricity bill went up just 16 percent.
Homes and public facilities are renovating to change their boilers to be fueled by cheaper electrical heat instead of gas. It is the general opinion that the government will not hike electricity prices before next year’s legislative and presidential elections. Consumers know their government well. The rolling blackout may be just the start of frequent power outages.
The power distribution system must be fundamentally revamped, first by ditching the idea that manufacturers must be coddled at any cost. Homes should stop subsidizing the cost of power used by exporters.
Despite the immediate toll a price increase could have on corporate profit figures, the government should hike industrial utility charges. Even former LG executive Kim said authorities should at least get back its costs from Samsung and LG, which make astronomical profits.
The government should also improve the power supply network to make it one befitting the country’s advanced information technology. A smart-grid system, or a remote backup power system, can prevent casualties when people are stuck in elevators or tunnels.
It is just a thought, but authorities could cut off power first at the offices of environmental activists or local governments, which are the first to protest new power-generating facilities, when power is short. We need fairness in the energy supply as well.
*The writer is an editorial writer of the JoongAng Ilbo.
By Lee Chul-ho