With urging by Park, electricity bills to shrink

The government decided Thursday to give a three-month discount on household electricity bills as the public boils over the high cost of using air conditioners to fight a prolonged heat wave.

The ruling party and the government held an emergency meeting Thursday afternoon to discuss the snowballing public ire at the current progressive electricity billing system.

Following the meeting, the ruling party and the Ministry of Trade, Industry and Energy announced that discounts will be given on July, August and September household utility bills.

While the current six-tier billing system will be maintained in principle, each tier will be expanded by 50 kilowatts for the three months, Rep. Kim Gwang-lim, chief policymaker of the Saenuri Party, said. The adjustment will cost about 420 billion won ($381.82 million) and all 22 million households will receive discounts, Kim said. “All will see about a 20 percent cut in their monthly bills,” he said, adding that the discount will be applied retroactively for July bills.

Deputy Prime Minister for Economic Affairs Yoo Il-ho and Trade, Industry and Energy Minister Joo Hyung-hwan attended the meeting with the ruling party’s lawmakers.

The decision to give a discount for July, August and September household utility bills came hours after President Park Geun-hye promised to do something.

“The unusually hot temperatures are making lives of everyone hard, and I feel sorry that the people are unable to turn on air conditioners at home because of electricity price,” she said in a luncheon with the new leadership of the ruling Saenuri Party. “The party and the government will discuss the issue and soon make public their conclusion.”

Park defended the pricing system, introduced more than four decades ago to preserve electricity for Korea’s growing export industries. Under the progressive billing system, households pay higher price per unit if they use more. For businesses and industries, there is no such system.

“Because our country is completely relying on energy imports, we had to maintain the progressive billing system,” Park said. “But because so many people are struggling this year in particular due to the abnormally high temperature, the government has been considering a plan to resolve the issue.”

Park’s remark was in response to a request by the newly elected chairman of the Saenuri Party, Rep. Lee Jung-hyun. During the luncheon, Lee proposed that the nation change the progressive billing system. He said the measure can be temporary to cover bills from June to September and proposed an urgent meeting among the party, government and Blue House.

As the heatwave continues, power consumption reached its highest level in history Thursday. According to the Ministry of Trade, Industry and Energy, the country’s electricity demand shot up to 84.49 million kilowatts at 3 p.m., setting a record. It skyrocketed further to 84.97 million kilowatts at 5 p.m., setting another record. As of 5 p.m., the reserve rate was 7.9 percent, down from 8.5 percent at 3 p.m..

Korean households pay 60.7 won per kilowatt for the first 100 kilowatts in a month. The price goes up to 125.9 won for the next 100 kilowatts per month and as high as 709.5 won per kilowatt - or 1,100.7 percent more than the starting price - if they consume more than 500 kilowatts in a month. There are six levels.

The public has called on the government to change the system. No progress has been made, but a temporary discount on household and industrial electricity was given from July through September last year in order to help boost consumer spending and industrial exports.

“This year’s cut will be larger than last year’s,” said a government official. “The discount will be applied retroactively for the July bills, and the August bill will immediately reflect the reduction.”

Before attending the presidential luncheon, Lee received a briefing from Chae Hee-bong, director of the Office of Energy and Resources at the Energy Ministry, at the Supreme Council meeting.

Following Park’s remark at the luncheon, a meeting took place between the ruling party and the government and a three-month discount was decided. It was a reversal of the government position made earlier this week, when the Ministry of Trade, Industry and Energy rejected snowballing demands to revise the billing system.

BY SER MYO-JA, CHAE YOON-KYUNG [ser.myoja@joongang.co.kr]