Electricity rates to increase by 5 won per kilowatt-hour

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Electricity rates to increase by 5 won per kilowatt-hour

Electricity meter on a building in Seoul on Monday. The government announced that it is raising utility rates, including the electricity rate, due to rising international energy prices and won falling against the dollar. [YONHAP]

Electricity meter on a building in Seoul on Monday. The government announced that it is raising utility rates, including the electricity rate, due to rising international energy prices and won falling against the dollar. [YONHAP]

 
Electricity rates will increase by 5 won per kilowatt-hour from next month, the Ministry of Trade, Industry and Energy announced Monday.  
 
This is the sharpest increase since a new billing system went into effect in 2021.
 
Gas rates will also be increasing, by 1.11 won per megajoule.
 
The government has been forced to increase rates as oil prices increase globally and as the won falls against the dollar.
 
Electricity is currently billed at 88.3 won ($0.07) per kilowatt hour for the first 200 kilowatt-hours per month, 182.9 won per kilowatt-hour for 201 to 400 kilowatt-hours and 275.6 won per kilowatt-hour above 400 kilowatt-hours.
 
Gas is currently 15.88 won per megajoule.
 
The changes are expected to hit households already struggling with high inflation.  
 
Due to the changes, a family of four consuming 307 kilowatt-hours a month will pay an additional 1,534 won a month. For gas, they will pay an average of 2,220 won more a month.
 
As of June 26, oil is up 60 percent on year and natural gas 141 percent. The won is down 14 percent on year.  
 
Last week, the won hit 1,300 to the dollar for the first time in 13 years. On Monday, it closed at 1,286.50 won.  
 
The energy companies have been requesting a rate increase for years. 
 
A new billing system, in which the rate changes quarterly based on changes in international fuel prices, was first adopted last year, but rates were frozen as inflation increased rapidly.  
 
Kepco last year reported a record 5.9 trillion won operating loss. In the first three months of this year, the operating loss was 7.8 trillion won.  
 
It initially requested that the government raise rates by 3 won per kilowatt-hour, which is the maximum quarterly increase. The energy distributor also requested that the bar be raised from 3 won per kilowatt-hour to 5 won.  
 
But it was denied.
 
The government said Kepco had to come up with additional plans to improve its financial condition.  
 
All seven top Kepco executives, including CEO Cheong Seung-il, announced on June 20 that they will be returning the performance-based bonuses that they received last year, while bonuses of 440 other high-level employees will be cut by half.  
 
The government added that Kepco has agreed to take additional steps, such as selling some of its assets and restructuring some of its businesses.  
 
In the first quarter, the operating profit of Korea Gas Corp. (Kogas) increased, but accounts receivable were 4.5 trillion won in the first quarter, up from 1.8 trillion won at the end of last year.  
 
On Sunday, Deputy Prime Minister and Finance Minister Choo Kyung-ho said that rate increases are inevitable and that inflation could remain high for an extended period of time.  
 
 

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