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(LEAD) S. Korea to hike Q2 electricity, gas rates on high costs, losses

Economy 10:05 May 15, 2023

(ATTN: ADDS more details, comments in last 9 paras)

SEOUL, May 15 (Yonhap) -- South Korea will raise second-quarter electricity rates and gas prices on high global energy costs and mounting losses of state utility companies, the industry ministry said Monday.

The government will jack up the electricity rates for consumer and industrial use by 8 won (US$0.01) per kilowatt hour (kWh) for the second quarter, compared with a 13.1 won increase per kWh in the first quarter of this year, according to the Ministry of Trade, Industry and Energy.

The fee hike is estimated to cost a four-member household around 3,000 won more on average per month.

The government also decided to raise the second-quarter gas prices used for cooking and heating by 1.04 won per megajoule after freezing them in the first quarter, which will cause a four-member household to pay about 4,400 won more per month, the ministry said.

The second-quarter rates will take effect Tuesday and will not be applied retroactively.

The government was supposed to finalize the second-quarter utility rates in March but postponed the decision, citing the need to gather public comments further as it had sought ways to minimize people's economic burdens and to better manage inflation amid public outcries over spikes in heating and energy bills during the winter.

This file photo taken May 14, 2023, shows electric meters set up at a residential building in Seoul. (Yonhap)

This file photo taken May 14, 2023, shows electric meters set up at a residential building in Seoul. (Yonhap)

Industry Minister Lee Chang-yang stressed that the hikes are badly needed, given high global energy prices amid the Russia-Ukraine war and their impact on the management of the Korea Electric Power Corp. (KEPCO) and the Korea Gas Corp. (KOGAS).

"Worsening financial conditions of the energy public firms are feared to disrupt stable supplies of electricity and gas. ... We cannot rule out a situation where their financial crisis could spread to the financial market and further to the overall economy," Lee said in a public statement.

"Their self-rescue measures alone are far from enough to overcome the current crisis," he added.

In 2022, KEPCO reported a record operating loss of 32.63 trillion won, more than quadruple from a year earlier due to limited electricity rate hikes amid high inflation and an economic slowdown.

It also logged 6.18 trillion won of loss in the first quarter of this year.

KOGAS had about 11.6 trillion won in uncollected payments as of end-March, sharply up from 1.8 trillion won in 2021 and 8.6 trillion won in 2022.

In an effort to address financial woes, the two utility firms put forth a set of reform measures, such as property sales, restructuring overseas businesses and freezing workers' wages.


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