Korea to see steep hike in power bills in Q1

Minister of Trade, Industry and Energy Lee Chang-yang (Yonhap)

The government on Friday decided to raise the electricity rate in the first quarter of 2023 by 13.1 won per kilowatt hour, the largest on-quarter hike ever carried out.

This means that four people household that uses around 307 kilowatt hours will have to pay around 4,022 won more per month on average.

“From the second quarter on, we plan to decide whether or not to increase rates further by comprehensively reviewing global energy prices, inflation, domestic economic situation and financial situation of state-owned corporations,” Minister of Trade, Industry and Energy Lee Chang-yang said.

Lee also announced that it has decided to freeze gas prices in the first quarter of 2023 mainly as it sees that the price is expected to be burdensome even without the hike for people during the winter.

“As for gas rates, we plan to freeze rates in the first quarter of next year and will review whether to raise the rate in the second quarter,” Lee said.

Prior to the minister’s announcement, state-run Korea Electric Power Corp. and Korea Gas Corp. submitted their plan to normalize their money-losing business by 2026. It said 51.6 won per kilowatt hour of an electricity rate hike and 8.4 to 10.4 won per megajoule of a gas rate hike is necessary next year.

The two state-run corporations were hit hard by the global energy price surge.

Kepco’s cumulative operating loss mounted up to 21.8 trillion won as of the third quarter, and it is estimated that this year's cumulative operating loss will exceed 30 trillion won.

Kogas’ cumulative accounts receivable stands at 5.7 trillion won as of the third quarter, which is more than three times higher than last year's 1.8 trillion won.

This year electricity rate increased by 19.3 won per kilowatt hour and the gas rate rose by 5.47 won per megajoule.

Due to these circumstances, Lee stressed that the hike is inevitable and will also make sure to simultaneously strengthen energy welfare, such as easing the burden on people from vulnerable classes, farmers and small businesses.