Experts discuss options of overhauling the progressive charging system, worked out by a task force on the system, at the Korea Press Center in Seoul on June 3. (Photo: MOTIE)

The government is expected to lower the burden of electricity prices for households by easing the progressive charging system.
On the other hand, Korea Electric Power Corp. will likely be forced to pick up the bill for those losses. It will exacerbate the business performance of KEPCO, which has already been struggling to cope with rising losses caused by the government’s energy paradigm shift.

The corporation is forced to reduce its dependence on nuclear power, which maintains lower unit prices and instead increase the portion of more expensive gas- and coal-fired power generation. KEPCO had expected increases in electricity charges to cover rising losses, but the government is expected to take steps to reduce the burden of electricity bill for consumers.

The Ministry of Trade, Industry and Energy (MOTIE) and KEPCO hosted a session to discuss options of overhauling the progressive charging system, worked out by a task force on the system on June 3.

The task force announced three scenarios on easing or abolishing the progressive charging system. One of the scenarios is about retaining the current three-stage progressive charging system and expanding the coverage scope of the progressive charging system in a temporary step for two months between July and August.

The second option is to reduce the current three-stage progressive charging system to a two-stage one only for the period between July and August. The third scenario is about abolishing the progressive system by unifying a single charging system during the whole of each year.
The easing or abolishing of the progressive charging system is forecast to incur a maximum 298.5 billion won in losses to KEPCO. The power company had to shoulder an additional bill of 358.7 billion won in losses caused by the relaxation of the progressive charging system last summer.

During the discussion session, the government did not come up with steps to ease the snowballing losses KEPCEO is forced to shoulder by relaxing the progressive charging system. In relief steps to lower households’ electricity charges for last July and August due to an unprecedented heat spell, the MOTIE raised 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 was imposed for using electricity of 300kWh or less, and the second-stage rate of 187.9 won per kWh was levied for electricity between 301kWh and 500kWh. Households using electricity of 501kWh or more were subject to the 3rd stage rate in the same way as currently.

The ministry estimated that the temporary relief steps brought 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 had to shoulder 88,190 won worth of additional 100kWh before the discount, but the relief measure lowered their bills 22,510 won or 25.5 percent to 65,680 won.