As it became known that the draft enforcement decree for the special law to strengthen the competitiveness of the steel industry, the so-called "K-steel law," omitted a plan to support electricity rates, grumbling in the steel industry is growing. Steel mills operate electric furnaces 24 hours a day to produce steel, so electricity rates account for a high share of total expense.
According to the Ministry of Trade, Industry and Resources and the steel industry on the 13th, the draft enforcement decree of the K-steel law, which passed the National Assembly in Nov. last year, did not include a plan to support electricity rates, which had been a core demand of the industry. Industrial electricity rates have risen by more than 70% over the past three years.
The K-steel law is expected to be preannounced for legislation as early as this month, but the possibility of adding an electricity rate support plan to the enforcement decree is not high. This is because the Ministry of Trade and Industry (MOTI) is sticking to the position that it is difficult to include in the enforcement decree matters that were not reflected in the original bill.
A senior government official drew a line, saying, "An enforcement decree stipulates matters delegated by the bill and those necessary for its implementation," and, "We cannot newly create and reflect what is not included in the bill." An official at the Ministry of Trade and Industry (MOTI) also said, "Further legal review is needed regarding support for electricity rates."
Electricity rate support was not included in the K-steel law because the government opposed it. Vice Minister Moon Sin-hak of the Ministry of Trade and Industry (MOTI) also said at a meeting integrating the K-steel law that "there is a possibility of being sued under World Trade Organization (WTO) rules, and we must also consider fairness with other industries."
Steelmakers say that, with the overhaul of the electricity rate system set to take effect next month, if they cannot receive electricity rate support, they will have no choice but to shoulder a massive expense burden.
The overhaul of the electricity rate system includes discounting rates during daytime hours when solar power generation is active and raising them at night. Currently, the average unit price of industrial electricity rates is 180–185 won per kilowatt-hour (kWh), with nighttime rates nearly 50% cheaper than daytime rates.
Industries with a high share of daytime operations are likely to benefit, but in the case of the steel industry, which operates 24 hours a day, a sharp increase in nighttime electricity rates would deliver a blow.
The steel industry is pouring its efforts into adding electricity rate support to the enforcement decree. Earlier this month, it submitted a proposal to the government, together with North Gyeongsang Province and Pohang City, asking that an electricity rate support plan be included. The proposal included introducing a steel-dedicated electricity rate system and strengthening support for low-carbon transition.