Decision delayed on electricity and gas rate hikes

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Decision delayed on electricity and gas rate hikes

A person stands in front of electricity and gas meters of a building in Seoul on March 6. [YONHAP]

A person stands in front of electricity and gas meters of a building in Seoul on March 6. [YONHAP]

 
The government is taking longer than expected to announce new electricity and gas bills for the second quarter.
 
The delay comes amid calls by politicians and the public to ease the burden of rising energy prices, even as public utility companies suffer mountain losses from artificially low rates.
 
The discussion on energy prices follows the "heating bill bombs" that rocked households last winter.
 
Korea Electric Power Corporation (Kepco) submitted its adjusted unit price of utilities for the second quarter to the Ministry of Trade, Industry and Energy on March 16.
 
The Trade Ministry and Finance Ministry set the utility rates based on the regularly submitted numbers, usually after discussions.
 
A decision on the rates was supposed to come Tuesday, but extended inter-ministerial discussions are delaying the decision by several days, a source from the Trade Ministry said.
 
The government initially wanted to freeze rates — or raise them as little as possible — to cushion the impact from high heating bills. Even President Yoon Suk Yeol got personally involved and pledged to slow electricity and gas rate hikes. Energy vouchers and subsidies for vulnerable groups were issued as well.
 
However, experts say rate hikes should be maximized in the second quarter when energy usage is at the lowest of the year due to little demand for heating or air conditioning.
 
According to Korea Power Exchange, the two months with the lowest average peak power demand last year were April, at 66,096 megawatts, and May, at 66,243 megawatts. In December, it was 82,176. The peak power demand is the demand for electricity at the time of day when it is used most.
 
“Electricity and gas bills need to be rationalized in the second quarter when people feel hikes the least to minimize uncertainty in the latter half of the year,” said Kang Cheon-gu, a visiting energy resources engineering professor at Inha University.
 
“Continued hikes will bring down energy consumption,” Kang added, also noting the need to increase aid for vulnerable groups.
 
Electricity bill increases have in fact brought down electricity consumption.
 
Electricity prices rose by 13.1 won (1 cent) per kilowatt in the first quarter, and the average peak power usage for January fell by 0.4 percent on year and February by 1.4 percent. Electricity consumption in March is expected to decline.
 
“Many people have cut back on their electricity consumption after seeing their bills,” said Yoo Seung-hoon, dean of Seoul National University of Science and Technology’s College of Creativity and Convergence Studies.
 
Mounting losses by public electricity and gas corporations are tempting the government to raise rates, too
 
Kepco’s loss was over 32.6 trillion won last year, an all-time high, while Korea Gas Corporation’s receivable accounts neared 9 trillion won, skyrocketing from 1.8 trillion in 2021.
 
Prime Minister Han Duck-soo said in an interview with a newspaper outlet on March 13 that energy rate adjustments "could be inevitable" in the first half.
 
Deputy Prime Minister and Finance Minister Choo Kyung-ho said during an emergency economic ministers’ meeting on March 6 that the government will minimize the people’s financial burden by stabilizing public charges.
 
Utility bills rose 28.4 percent on year last month, the highest among all sectors and six times the 4.8 percent inflation.

BY JEONG JONG-HOON [sohn.dongjoo@joongang.co.kr]
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