|Outdoor units of air conditioners are seen at a building in central Seoul, Monday. Yonhap|
By Baek Byung-yeul
Korea Electric Power Corp. (Kepco) will increase electricity bill rates for the July-September period, as the company has been approved to raise the fees by a maximum 5 won ($0.0039) per kilowatt-hour (kWh) due to the surge in global oil and liquefied natural gas (LNG) prices, the state-run company said Monday.
|Korea Electric Power Corp. (Kepco) headquarters in Naju, South Jeolla Province / Courtesy of Kepco|
"The decision to up the electricity price was inevitable due to sharp rise in electricity prices and worsening financial conditions of Kepco," the company said in a statement.
In the first quarter, Kepco saw 7.79 trillion won ($6.06 billion) in losses, which was about 2 trillion won more than the sum of all losses in 2021. Industry view is that the company could lose as much as 30 trillion won this year if it doesn't adjust its prices.
Even though the company increased the electricity price, it is still not enough to offset the deficit. It is known that Kepco can earn an additional profit of about 520 billion won when it raises the electricity price by 1 won per kWh, and the 5 won increase will add only 1.3 trillion won more to the company's income.
Kepco was originally scheduled to announce the electricity rate change on June 20, but the state-run company rescheduled the announcement to Monday after being criticized for its lax management by the prime minister.
Prime Minister Han Duck-soo admitted Korea's electricity may be the cheapest in the world and that it is essential to raise the rate, but pointed out that Kepco also needs to keep its management tight.
"If Kepco was a private company, it would have gone bankrupt. The public thinks its self-rescue efforts are insufficient," Han said on June 21 when he met reporters at a general assembly of the Bureau International des Expositions (BIE) in Paris.
In response to the criticism, Kepco said its key executives including CEO Cheong Seung-il would return the entire amount of their performance-based bonuses, and executives at the first grade or higher would return a hefty portion of their bonuses.
In line with the electricity price adjustment, the Ministry of Trade, Industry and Energy also announced Monday that it will raise city gas prices for households by 1.11 won per megajoule (MJ) next month.
With the price increase, households using city gas will pay 16.99 won per MJ from July 1 while they have paid 15.88 won per MJ.
The ministry said the price increase is inevitable as international oil price, natural gas spot price and exchange rates have soared since the second half of 2021, but it tried to minimize the price hike in consideration of inflation.