State-run company under fire over heating price

The state-owned Korea District Heating Corporation, which provides heating and cooling services nationwide, dug in its heels on Friday, announcing that it will freeze the heating price starting in March even though prices for natural gas and oil have been reduced.

Since the company raised the heating price by 4.9 percent in July 2013, it has remained the same.

Heating prices may be lowered in line with the falling gas price - which accounts for about 80 percent of the cost. The gas price was reduced by 8 percent in January to 177 won (17 cents), down from 192 won per one Megajoule last December, according to the Korea Gas Corporation. The heating corporation typically controls the heating systems in metropolitan cities nationwide, though in other regions heating systems are controlled by individual apartment complexes.

Questions over why it has not reduced heating costs intensified when reduced gas prices were reflected in the heating bills for residents in apartments where heating systems are controlled by the complex. Tenants in apartments where heating systems are run by the Korea District Heating Corporation, however, did not see that reflected in their bills.

An official from the heating corporation, speaking on the condition of anonymity, said that because of the company’s financial situation, it did not “have a big enough profit margin to lower heating costs.”

However, “We do know the company has generated considerable revenue over the years,” said Yun Cheo-han, head of Citizens’ Coalition for Economic Justice. “And we don’t understand how they keep claiming that they don’t have enough revenue.”

Over the past two years, the Korea District Heating Corporation has seen profits amounting to about 350 billion won.

Other analysts have also pointed out that the conflicts over heating costs lie in the reporting system, which requires the Korea District Heating Corporation to draw up a report to the government concerning heating cost adjustments.

“The government needs to intervene to solve the issue over heating costs,” said Yoo Byeong-sam, a professor at Yonsei University. “The reporting system needs to be reconsidered, and the government must push the company to reflect other factors in its price.”

BY JEON ICK-JIN, KANG KI-HEON and CHA SANG-EUN [ypc3c@joongang.co.kr]