No more dilly-dallying on utility rate hike

Kim Dong-cheol, who was inaugurated as the CEO of Korea Electric Power Corporation (Kepco) last month, does not go home and lives in his office, whose door name plate now reads “war room” in the Kepco headquarters in Naju, South Jeolla. He spent the long Chuseok holiday in the war room, as he is determined not to leave the office until he finds a “solution to the company crisis.”

Kim is the first politician-turned-president for the state utility firm founded in 1961. During his first press briefing, Kim said that a hike in electricity fees to a “reasonable level” is imperative. Without an increase in the power charges, the public utility company will hit its limits in surviving on debts to shake the power ecosystem.

Kepco must raise its power charge to lessen its deficit of 47 trillion won after selling power far below the production cost for years. In 2021, the liberal administration mandated a quarterly adjustment to the fuel charge based on the changes in energy costs. But the mechanism has become dysfunctional under political pressure. Although the following conservative administration attempted raises this year, they were minor.

The government has yet to set the fourth-quarter electricity rate, deferring the announcement due to the Chuseok holiday. Given the backfire from a sharp utility hike during the winter season, the government may be hesitant to the unpopular raise during the cold season just ahead of the next parliamentary elections in April. But a hike that can reasonably ease the cost-retail rate gap should not be delayed any further.

High inflation can no longer be a reason for the deferment. The Bank of Korea, which has the responsibility to watch over prices, now worries about worsening current account balance due to energy over-spending from cheap electricity fees. To gain the public’s understanding for the raise in utility bills, Kepco must restructure its organization first to save costs.

But restructuring must not be an excuse to put off the normalization of the power rate. Many experts worry about future power infrastructure if Kepco does not invest timely to meet its restructuring goal. The Yoon Suk Yeol administration must be different from the previous government, which was criticized for politicizing the power rate for popularity. We hope Kim, with a political background, uses his connections to persuade the government and political circles.