Electricity rates for the second quarter (April–June), to be applied starting next month, will be frozen at current levels. As a result, household electricity rates will be frozen for the 12th straight quarter, and industrial rates for the 6th straight quarter.
On the 23rd, Korea Electric Power Corporation (KEPCO) said it will keep the fuel cost adjustment unit price for the second quarter of this year at +5 won per ㎾h (kilowatt-hour), the same as now.
Electricity rates consist of a basic rate, an energy usage rate (base fuel cost), a climate and environment rate, and a fuel cost adjustment rate. Among these, the fuel cost adjustment rate is set within a ±5 won per ㎾h range based on short-term energy expense fluctuations over the past three months for sub-bituminous coal and LNG (liquefied natural gas).
This quarter's fuel cost adjustment unit price reflects the ceiling of +5 won. Although the past three months' sub-bituminous coal and LNG prices fell, creating downward pressure on the unit price, international oil prices surged from late February following the United States and Israel's invasion of Iran. The government took into account that the increase in international oil prices due to the Middle East crisis has not yet been reflected in the second-quarter fuel cost adjustment rate.
It also reflected that KEPCO accumulated massive operating losses during the 2022–2023 LNG price surge. As the rise in fuel costs could not be immediately reflected in electricity rates at the time, KEPCO posted large deficits. Over the four years since 2021, KEPCO's cumulative operating loss has reached 29 trillion won. As of the end of last year, KEPCO's liability and borrowing fund stood at 206 trillion won and 130 trillion won, respectively.
A KEPCO official said, "There is an 8–9 month reflection lag for the fuel cost adjustment rate," and noted, "If international oil prices continue to rise due to the Middle East crisis, the actual fuel cost could increase in the fourth quarter this year, but the impact on rates will be limited due to the application of caps and floors to protect consumers."