Delayed homework means more pain later
Published: 22 Jun. 2023, 20:19
Electricity bills for the third quarter won’t go up as the government chose to pause the rate increase in light of the summer peak season. Since President Yoon Suk Yeol took office in May last year, electricity bills have gone up for five straight quarters, including a hike of 21.1 won ($0.02) per kilowatt-hour (kWh) in the first two quarters this year.
The government said that the freeze is necessary to ease the financial burden for the low-income class during this summer when an extraordinary heat wave has been forecast amid the slowed economy and still-high inflation. Earlier, Second Vice Minister for Energy Kang Kyung-sung said a pause in the increase is better to lighten the burden on households. The government also has more leeway to adjust the rate hike, as the structural losses at the Korea Electric Power Corporation from electricity purchase cost higher than its selling prices have been slightly easing.
But the government can hardly afford to freeze the electricity rate. The state utility giant, which had generated multibillion dollars in profit over the past years, is under serious woes, with its deficit accumulated to nearly 45 trillion won as of March from the former administration’s hasty phase-out from nuclear energy and political populism that froze the rates. Although slightly improved, the power monopoly gathers a deficit for every power it sells. Rates must go up to save the company. The Ministry of Trade, Industry and Energy late last year reported to the National Assembly that electricity bills must increase by 51.6 won per kWh this year to normalize the Kepco. To meet the target, the rate must be spiked by 30.5 won in the fourth quarter, which would be out of the question, given the cautiousness of the government and the governing party.
In a recent debate hosted by the Korea News Editors’ Association, People Power Party (PPP) leader Kim Gi-hyeon said the power rate could be sustained in the latter half to suggest a freeze may follow in the fourth quarter too. International energy prices have been stabilizing, but the conservative government is opting for a populistic move just like the former liberal administration, particularly ahead of the parliamentary elections next year. Experts advised rates should be normalized in the second quarter when heating and cooling demand is relatively low. But the PPP interfered to keep the rise at 8 won per kWh.
The economy cannot afford the luxury of cheap power anymore. The bill could be waived for the election, but it would eventually arrive at consumers’ doors. Kepco’s losses will only balloon, which could also add a burden to taxpayers. It is frustrating to see the government repeat the same mistake over and over.
The government said that the freeze is necessary to ease the financial burden for the low-income class during this summer when an extraordinary heat wave has been forecast amid the slowed economy and still-high inflation. Earlier, Second Vice Minister for Energy Kang Kyung-sung said a pause in the increase is better to lighten the burden on households. The government also has more leeway to adjust the rate hike, as the structural losses at the Korea Electric Power Corporation from electricity purchase cost higher than its selling prices have been slightly easing.
But the government can hardly afford to freeze the electricity rate. The state utility giant, which had generated multibillion dollars in profit over the past years, is under serious woes, with its deficit accumulated to nearly 45 trillion won as of March from the former administration’s hasty phase-out from nuclear energy and political populism that froze the rates. Although slightly improved, the power monopoly gathers a deficit for every power it sells. Rates must go up to save the company. The Ministry of Trade, Industry and Energy late last year reported to the National Assembly that electricity bills must increase by 51.6 won per kWh this year to normalize the Kepco. To meet the target, the rate must be spiked by 30.5 won in the fourth quarter, which would be out of the question, given the cautiousness of the government and the governing party.
In a recent debate hosted by the Korea News Editors’ Association, People Power Party (PPP) leader Kim Gi-hyeon said the power rate could be sustained in the latter half to suggest a freeze may follow in the fourth quarter too. International energy prices have been stabilizing, but the conservative government is opting for a populistic move just like the former liberal administration, particularly ahead of the parliamentary elections next year. Experts advised rates should be normalized in the second quarter when heating and cooling demand is relatively low. But the PPP interfered to keep the rise at 8 won per kWh.
The economy cannot afford the luxury of cheap power anymore. The bill could be waived for the election, but it would eventually arrive at consumers’ doors. Kepco’s losses will only balloon, which could also add a burden to taxpayers. It is frustrating to see the government repeat the same mistake over and over.
with the Korea JoongAng Daily
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