MOTIE Takes Steps to Lower Electricity Charges Caused by Heat
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MOTIE Takes Steps to Lower Electricity Charges Caused by Heat
Unprecedented heat makes households worry about burdensome electricity bills

29(Wed), Aug, 2018




A long unprecedented heat spell hits many parts of the nation, including Seoul, for several weeks.



The Ministry of Trade, Industry and Energy (MOTIE) announced relief steps to lower households¡¯ electricity charges for July and August due to the ongoing unprecedented heat spell.


The ministry decided to raise the cap of electricity consumption for the first and second stage rate of the progressive charging system by 100kWh as a temporary relief measure to alleviate the burden of electricity costs to households.


The progressive charging system is divided into three stages. The 1st stage rate of 93.3 won per kWh is imposed for use of electricity of 200kWh or less, the second-stage rate of 187.9 won per kWh is levied for electricity use between 201kWh and 400kWh, and the third-stage rate of 280.6 won per kWh is imposed for 400kWh or more.


In accordance with the relief measure, the 1st stage rate of 93.3 won per kWh will be imposed for using electricity of 300kWh or less, and the second-stage rate of 187.9 won per kWh will be levied for electricity between 301kWh and 500kWh. Households using electricity of 501kWh or more will be subject to the 3rd stage rate in the same way as currently.


The ministry estimated that the temporary relief steps will bring down July and August electricity charges for 15.12 million households that had been subject to the second stage or higher rate by an average 10,370 won, or 19.5 percent per household. A four-member family using a monthly average of 350kWh will have to shoulder 88,190 won worth of additional 100kWh before the discount, but the relief measure will lower their bills 22,510 won or 25.5 percent to 65,680 won.


The ongoing killer heat spell has shown no signs of easing, with the temperature in Seoul that went up to 39.4, the highest in 111 years. The heat wave prevailed into the earning mornings for days, causing sleepless nights for millions of people.


To cope, people are turning to the operation of household air-conditioners or electric fans to beat the sweltering heat. Households are now increasingly worried about the consequences of the heat, including the burdensome electricity bills they will shoulder. Households will see their electricity charges rise to unimaginable levels due to a progressive charging system in which rates go higher three times according to overall demand of electricity.


Worrying about the upcoming electricity charges, more and more people have begun to call for the abolishment of the progressive charging system, or at least temporary relief from the imposing of the system.


In 2016, the progressive charging system was revised to the current one with. Graduated rates were lowered to the current maximum three-fold increase from the previous maximum 11-fold jump.


But households will shoulder electricity charges worth a maximum of a seven-fold jump this month, higher than in previous months, since they are forced to operate their air conditioners longer due to the heal spell. The days with temperatures soaring over 33 degrees added up to 10.3 as of July 25, threatening to surpass the record of 10.5 recorded in 1978.


The government finds it difficult to change the progressive charging system, which was revised less than two years ago. The MOTIE began to ponder how to give households relief from huge electricity bills.


Prime Minister Lee Nak-yeon said the heat wave was the equivalent of a natural disaster. In 2015 and 2016, households were given a reprieve from the normal electricity rates. In these cases, 6.47 million households benefited from a combined cut of 130 billion won. The problem is that someone will have to shoulder the cost caused by the unprecedented heat.


That would be Korea Electric Power Corp.
KEPCO suffered a setback by posting a 127.6 billion won operating loss for the second straight quarter. The government¡¯s energy paradigm shift brings great consequences to the business performance of KEPCO, as the corporation is forced to reduce its dependence on nuclear power with lower unit prices, increase the portion on gas- and coal-fired power generation.


Figures released by KEPCO showed that KEPCO saw power buying costs soar 1.491 trillion won to 14.03 trillion won in the first quarter of this year, compared to the previous quarter. The reason is that KEPCO spent 724.6 trillion won less from KHNP, but 683.1 trillion won more from five power companies with coal-fired plants and 1.533 trillion won more from IPPS primarily operating gas-fueled plants.



   
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