Toward fairer utility billing

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Toward fairer utility billing

Taxes and public utility fees are different. Taxes are forcibly collected. Fees are charged to recoup the cost of services.

An electricity bill is referred to as a utility tariff. It is not incorrect as a surcharge is levied without being specified on the bill. It is a punitive tariff as the difference between the top and bottom section is as much as 11.7 times. The bombardment bill is dreaded when it is extremely cold or hot.

It is why the government’s decision to ease the progressive electricity billing is seen as a tax cut for the rich.

Fees should be charged for the use of the service and tax by income in order not to not be met with resistance. But it does not always work that way in reality. There is much more to consider, and some grounds are ambiguous. Some would end up paying more and some less. Politicians step in to fix the problem, but often worsen it. The progressive surcharge on household electricity billing has been maintained for the last 40 years despite its problems.

It may be finally fixed this time because, first of all, the opposition is standing at the forefront. The ruling party and government formed a special energy committee in the summer of 2013. They discussed easing the progressive charge and levying the utility fees according to the fuel cost. But the opposition at that time vehemently opposed, claiming that the move would merely help the rich, giving the example that a scion of a chaebol group gets monthly electricity bill of more than 10 million won ($10,000). It argued that the money earned from the poorer class should not pay for the power bills for the rich. But this time, it is the opposition that has been more aggressive to pursue the cut.

Due to climate change, summer has gotten hotter and winter colder. Public disgruntlement over utility fees would grow every year. The government cannot ignore the problem any longer. Korea now has leeway in power generating capacity. Reserve ratio during peak summer season remains above 15 percent after the government hurriedly expanded capacity following the blackout crisis in 2011 and due to lethargic industrial activity from slow economy. Then, there is the presidential election coming up next year. The government and politicians must do something to ease the discomfort and complaints of 22 million households.

The best solution is to rationalize the electricity fees. The easing of the six-stage progressive billing system would end up raising the rates for all households. To use more power in summer and winter, consumers should pay more for smaller use in the spring and fall. The middle-class could be asked to pay some of the bills for July-August and January-February throughout the rest of the year to even out the burden. Some would complain that this would work more favorably for the rich that utilize more power.

But there are other gains to consider. First of all, the system would help aid growth led by green industry. Rationalizing the electricity bills would boost demand for renewable energy. Power generation from sunlight, terrestrial heat, and wind would gain more cost competitiveness, which helps the environment and economy. One should consider it as investment for the future.

Second, unnecessary power consumption could be reduced. Electricity makes light, power and heat, but the primary function is to generate light and power. Using electricity to make heat is a waste. When oil is used to make power, heat efficiency is reduced by 40 percent. Power used to heat vinyl greenhouses and fields costs 1 trillion won.

Third, the state wouldn’t need a big budget to build nuclear and fuel power generators to meet demand. A greener and safer society would arrive sooner if we just rationalized the way we utilize power.

Authorities should, therefore, consider four major issues when addressing the energy charge system. First, there should be more consideration for the poor. Electricity is indispensable and a basic welfare product. Whether it is collected from the industry or richer households or tax coffers, electricity needs to be supplied affordably to the poorer people. But authorities must come up with strong reasons to persuade the side that pays more.

Second, they must not resort to populism as electricity cannot be a cheap resource. The cumulative deficit at state utility firm Korea Electric Power Corp. reached more than 100 trillion won. Taxes would inevitably cover up the losses if electricity is supplied cheap. Third, energy as stock investment needs a portfolio to leverage against risks. The industry — fuel, renewable, and nuclear energy — must grow in balance as not to trigger an energy crisis. Fourth, the new energy outline also needs to prepare for post-unification.

We need a plan to help ease North Korea’s energy shortage for the near future and sustainable energy supply system for the whole Korea Peninsula after unification for the long term.

JoongAng Ilbo, Aug.18, Page 30

*The author is an editorial writer of the JoongAng Ilbo.

Yi Jung-jae

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