Minister Kim Sunghwan of the Ministry of Climate, Energy and Environment said on the 4th that he would consult with the Ministry of Planning and Budget on measures such as converting the electric vehicle subsidies system into a fund format.
The Minister stated accordingly at a press briefing marking the first anniversary of the launch held at Government Complex Seoul that if the current trend continues, there is a high possibility the electric vehicle subsidies budget will run out by August or 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 is allocated. He then added regarding the issue of matching local government subsidies that since the local elections are over, the ministry will work with the Ministry of the Interior and Safety so local governments can also allocate additional subsidies budgets.
On electricity rates, the Minister noted the need to cut industrial rates. The Minister said the current industrial electricity rate is 181 won per kilowatt-hour (kWh), while China is in the 120-won range and the United States is also on average in the 120-won range, adding that because Korea competes substantially with China, stabilization at a lower level for industrial electricity rates is needed.
He added that it has been just over a month since the time-of-use rate system was implemented, but large-scale petrochemical complexes or steel mills whose (plant operation) patterns have not changed much still do not see much benefit, and said it appears a regional differential electricity rate system should be applied to such places.
The Minister said the regional differential electricity rate system is being designed to reflect three elements—power plant siting, transmission costs, and balanced national development—and said the schedule for public hearings will not take long.
To a question on whether the government is reviewing the introduction of a price cap on liquefied natural gas (LNG), the Minister replied, it is not at that stage yet. Presenting 146 won as the average annual system marginal price (SMP) threshold at which KEPCO turns to a deficit, the Minister said it is currently around 126 won, so the burden on KEPCO is not yet significant.
However, he said there could be a point when gas purchased at high prices in the futures market early in the war affects costs, and noted that if a surge in gas prices leads to higher household electricity bills or a KEPCO deficit, the government is internally reviewing a system to curb excessive profits by private power generators.