The application criteria for the electric rate progressive system have not changed for eight years, causing households with many family members to pay higher rates despite lower per capita electricity usage.
According to the government and the Korea Electric Power Corporation on the 17th, the progressive electric rates that do not apply to industrial and general (commercial) use are only applied to dwellings.
The dwelling electric rate system for July and August is 'under 300 kWh' (120 won per kWh), 'over 300 kWh and under 450 kWh' (214.6 won), and 'over 450 kWh' (307.3 won). The more electricity used, the higher the rate tier.
The basic rate follows the same structure. When usage is under 300 kWh, the basic rate is 910 won, but it increases to 1,600 won if it exceeds 300 kWh. If it exceeds 450 kWh, it rises to 7,300 won.
Korea introduced this progressive system in 1974. The purpose was to impose punitive rates on high-consumption households to encourage savings. While there have been some changes to the progressive criteria, the current criteria have remained unchanged for eight years since 2018.
The government considers 450 kWh to be the threshold for excessive electricity consumption, but this is based on the average monthly electricity usage of a four-member household during the summer. According to a survey by the Korea Energy Economics Institute in 2020, the average monthly electricity usage for a four-member household in July and August was 427 kWh.
According to data submitted by KEPCO to Democratic Party of Korea lawmaker Jang Cheol-min, in August of last year, among the 25.12 million households in the country, 40.5% (10.22 million households) were subject to the highest progressive rate, exceeding 450 kWh. There were 8.95 million households applying for the first tier and 6.04 million households applying for the second tier.
This progressive system imposes economic disadvantages on multi-child households. Assume there is a one-person household that uses 300 kWh of electricity and a four-person household that uses 600 kWh. The per capita electricity usage of the four-person household is half that of the one-person household. However, the electric bill for the four-person household (146,000 won) is about three times that of the one-person household (46,000 won).
In contrast to electricity, gas and heating do not have a progressive system for residential use.