Korea Electric Power Corporation decides on the 2nd quarter electricity rates on the 21st. The accumulated operating loss over the past 4 years is 34.7 trillion won, and although the factors for an increase remain, the rates are frozen due to a slight recovery in revenue last year. The background for the possibility of freezing electricity rates includes recent inflationary pressures and the uncertainty of domestic political situations controlling the key to rate decisions. The photo shows an electricity meter installed in a densely commercial area in Seoul on the 20th./Courtesy of News1
Korea Electric Power Corporation decides on the 2nd quarter electricity rates on the 21st. The accumulated operating loss over the past 4 years is 34.7 trillion won, and although the factors for an increase remain, the rates are frozen due to a slight recovery in revenue last year. The background for the possibility of freezing electricity rates includes recent inflationary pressures and the uncertainty of domestic political situations controlling the key to rate decisions. The photo shows an electricity meter installed in a densely commercial area in Seoul on the 20th./Courtesy of News1

The possibility of freezing electricity rates has increased for the second quarter of this year. This is because Korea Electric Power Corporation has decided to maintain the fuel cost adjustment unit, one of the factors in determining electricity rates, at its current level. The government has kept KEPCO's fuel cost adjustment unit unchanged for 12 consecutive quarters.

KEPCO announced on the 21st that it has set the fuel cost adjustment unit at the current +5 won per kWh (kilowatt-hour). Electricity rates typically consist of basic charges, electricity consumption charges, climate environment charges, and fuel cost adjustment charges. The fuel cost adjustment unit, which is calculated based on the average price of fuel costs, such as bituminous coal, liquefied natural gas (LNG), and Brent oil for the three months prior to the quarter, affects the fuel cost adjustment charges.

Since the 3rd quarter of 2022, KEPCO has applied the maximum fuel cost adjustment unit of +5 won. The fuel cost adjustment charge for the second quarter was initially calculated to be -4.2 won per kWh due to falling fuel prices, but the government decided to maintain +5 won considering KEPCO's financial situation.

A government official noted, "Considering KEPCO's financial situation and the substantial amount of unadjusted fuel cost adjustment charges, we decided to maintain the same unit price as in the first quarter," and added, "We hope KEPCO will diligently implement self-initiated efforts for management normalization."

With the fuel cost adjustment unit remaining frozen for the second quarter, the likelihood of KEPCO maintaining its electricity rates has increased. Last year, KEPCO's operating profit returned to the black for the first time in four years, and the government is also unable to attempt electricity rate increases due to the continued economic difficulties facing the public.

However, KEPCO's accumulated liabilities are 205 trillion won, and the accumulated operating losses over the past four years amount to 34.7 trillion won, indicating that the factors for a rate increase still persist. Thus, both the government and KEPCO agree that a rate increase is essential.

Minister of Industry An Duck-geun emphasized in January, "Last fall, we used the difficult measure of raising only industrial rates due to the public's hardships," and noted, "Once the situation stabilizes, we must normalize electricity and gas rates." KEPCO President Kim Dong-cheol also emphasized in his New Year's address that "we will achieve normalization of electricity rates by reflecting the cost."