The government plans to implement a "regional differential electricity rate system" as early as October. The system aims to set lower electricity rates for areas near power plants and higher rates for the Seoul metropolitan area and inland regions. The intention is to fix the irrationality of the current system, which charges the same rate nationwide despite the transmission expense burden.
Areas near power plants have long demanded, "Our power self-sufficiency rate is high, so lower our rates accordingly." But the government said, "There are circumstances that make it difficult to set electricity rates based solely on self-sufficiency." As the rollout of the regional differential electricity rate system approaches, debate over "power self-sufficiency rates" continues.
◇ Power self-sufficiency rate up to 215% in plant areas: "Lower rates should apply"
In Korea, nuclear power plants are concentrated along the east coast and thermal power plants along the west coast. Electricity generated there is sent to the Seoul metropolitan area and inland via transmission lines.
The power self-sufficiency rate is the figure obtained by dividing a region's power generation by its power consumption. Regions with power plants naturally show high self-sufficiency. As of 2023, North Gyeongsang (215.6%) is the highest. It is followed by South Chungcheong (213.6%), Gangwon (212.8%), South Jeolla (197.7%), Incheon (186.3%), and Busan (174%). In contrast, Seoul (10.4%), Daegu (13.1%), Gwangju (9.3%), and Daejeon (3.1%) have relatively low self-sufficiency.
Regions with high power self-sufficiency are arguing for lower rates in line with the intent of the regional differential electricity rate system. However, a draft of regional differential power pricing that the Korea Power Exchange (KPX) submitted to the National Assembly in October last year proposed dividing the country into three zones—Seoul metropolitan area, non-metropolitan area, and Jeju—and applying different wholesale power prices. In response, regions with high self-sufficiency, including Incheon, Busan, and South Chungcheong, pushed back, saying, "Grouping us with regions that have low self-sufficiency is reverse discrimination."
◇ Government: "Many regions have high self-sufficiency but still have to buy power"
The government says, "There are circumstances that make it difficult to implement a regional differential electricity rate system using the power self-sufficiency rate as the sole criterion." It explained that even if a region's self-sufficiency—calculated by dividing its power generation by its consumption—is high, many regions still actually have to purchase electricity from elsewhere.
In April last year, the Ministry of Trade, Industry and Energy (before the energy function was split) cited Incheon as an example. Incheon ranks near the top nationwide in self-sufficiency because it hosts the Yeongheung Thermal Power Plant, but the electricity generated there is supplied to Seoul. As a result, Incheon uses electricity produced in other regions. Given such circumstances, it is difficult to set electricity rates based solely on self-sufficiency.
There is also the issue that self-sufficiency differs within the same metropolitan municipality, making it difficult to apply a single rate based on the self-sufficiency criterion. In Busan, Gijang County has a self-sufficiency rate of 1,896%, while Haeundae District is at 12%, and the remaining 13 districts and counties do not even reach 10%.
The Ministry of Climate, Energy and Environment, which took over energy affairs from the Ministry of Trade and Industry (MOTI), said in March regarding the amendment to the Special Act on Activation of Distributed Energy, "Because the regional conditions of the power grid do not align with the administrative boundaries of local governments, the proposal to reflect self-sufficiency by local government in the law should be reviewed carefully."
To implement the regional differential electricity rate system in October, the government plans to hold a public hearing soon. The specific details of the differential system will be decided after the hearing.