Electricity rates for the fourth quarter (October to December) will be frozen at the current level.
Korea Electric Power Corporation said on the 22nd it will keep the fuel cost adjustment unit price for the fourth quarter at 5 won per kWh (kilowatt-hour), the same as now.
Electricity rates consist of a basic charge, a power usage charge, a climate and environment charge, and a fuel cost adjustment charge. Among these, the fuel cost adjustment unit price—set each quarter in advance as the basis for calculating the fuel cost adjustment charge to reflect recent short-term energy price trends—is what determines the adjustment.
The fuel cost adjustment unit price is set within a range of ±5 won per kWh to reflect changes in fuel costs for bituminous coal and liquefied natural gas (LNG), among others, over the three months immediately preceding the quarter. The current maximum of "+5 won" is in effect.
The government and KEPCO kept the fourth-quarter fuel cost adjustment charge at the existing level, and because they did not separately raise the remaining items—the basic charge, the power usage charge, and the climate and environment charge—fourth-quarter electricity rates are, for now, frozen. However, the remaining items, such as the power usage charge, can be raised at any time.
KEPCO initially calculated, reflecting fuel price trends over the past three months, that the fuel cost adjustment unit price needed for this fourth quarter was -12.1 won per kWh.
However, the Ministry of Trade, Industry and Energy notified KEPCO to keep the fuel cost adjustment unit price at +5 won per kWh this quarter as well, reflecting that KEPCO's financial condition is severely strained at a crisis level and that the unadjusted amount in the power usage charge—the largest component of electricity rates—is considerable.
In the long term, observers say electricity rates are likely to rise as the Lee Jae-myung administration pursues an energy policy of transitioning to renewable energy. President Lee Jae-myung has also said that to expand renewable energy for carbon reduction, a certain increase in electricity rates is unavoidable.