Electric bills going up after presidential election

Economy

Published: 27 Dec. 2021, 18:54

Electric bills going up after presidential election

Electricity meter at a building in Seoul on Monday. Utility prices are to be hiked starting next year but after ther presidnetial election in March. [YONHAP]

Utility bills are going up after the presidential election in March.

Electric bills will be 5.6 percent higher than this year’s, which will translate into an additional 1,950 won per month for a family of four -- and possibly more.

The electric bill comes in three parts.

The average annual base rate is usually determined once a year.

But according to the Korea Electric Power Corp. (Kepco) on Monday, the government decided to raise the annual average fuel costs twice next year -– once in April and again in October.

Each hike will be 4.9 won per kilowatt hours, bringing the total increase to 9.8 won per kilowatt for the whole of 2022.

The second part of the bill is a quarterly charge based on the average fuel cost for the previous three months and that depends on international fuel prices, which have been volatile.

Last week, the government announced it was freezing the quarterly portion of the electricity bill for the first three months of next year citing inflationary pressure.

The third part of the bill is Kepco's charge to consumers for transitioning to cleaner energy including the use of renewable sources. That charge was made specific this year, at 5.3 won per kilowatt hour. Starting April 1, Kepco will charge 7.3 won per kilowatt hour.

Kepco said the increase was inevitable considering rising international fuel prices and the higher cost of using renewable energy.

Kepco stressed that the hike has been staggered to go easier on the average household.

Korea Gas Corp. also announced that gas prices will rise -- in May, July and October.

The average household will pay 2,460 won more in May, 1340 won more in July and 800 won more in October.

The Finance Ministry has been trying to freeze utility bills to prevent inflation.

Between April and September, consumer prices rose more than 2 percent. In October and November, they rose more than 3 percent.

In November, consumer prices rose 3.7 percent, the highest rate in a decade.

However, keeping utility price low will only increase the red ink at Korea’s energy companies.

In the first nine months of the year, Kepco's net loss was 2.2 trillion won, compared with a 1.9 trillion won net profit in the same period a year earlier.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]