Minister Kim Sung-hwan of the Ministry of Climate, Energy and Environment said on the 4th that the ministry would consult with the Ministry of Planning and Budget on measures such as converting the electric vehicle subsidies system into a fund.
The Minister stated accordingly at a press briefing marking the first anniversary of the launch held at the Government Complex Seoul that, at the current pace, there is a high chance the electric vehicle subsidies budget will be depleted by August–September.
The Minister said it is right, from a people-centered perspective, to allow consumers to buy as many vehicles as they want regardless of how much budget has been allocated. He then added on the issue of matching local government subsidies that, because the local elections are over, the ministry would work with the Ministry of the Interior and Safety so that localities can also allocate additional subsidies budgets.
Regarding electricity rates, the Minister noted the need to cut industrial rates. The Minister said industrial electricity rates are currently 181 won per kilowatt-hour (kWh), while China is in the 120-won range and the United States is also in the 120-won average, adding that because we compete significantly with China, stabilization at a lower level for industrial electricity rates is necessary.
The Minister added that it has been just over a month since the time-of-use tariff was implemented, but large-scale petrochemical complexes or steel mills where the (plant operation) pattern has not substantially changed still see little benefit, and said a region-based differential electricity rate system appears necessary for such places.
The Minister said the region-based differential electricity rate system is being designed to reflect three elements—power plant location, transmission costs and balanced national development—and said the timeline for public hearings will not take long.
Asked whether the ministry is considering introducing a price cap on liquefied natural gas (LNG), the Minister replied, it is not at that stage yet. The Minister cited 146 won for the annual average system marginal price (SMP) as the threshold at which KEPCO turns to a loss and said it is currently around 126 won, so the burden on KEPCO is not yet significant.
However, the Minister said there could be a point when the gas purchased at high prices in the futures market early in the war has an impact, and noted that if a surge in gas prices leads to higher household electricity bills or losses at KEPCO, the ministry is internally reviewing a system to curb excessive profits by private power producers.