Electricity Rates to Be Adjusted downward in 10 Years
Electricity Rates to Be Adjusted downward in 10 Years
  • Oh Hae-young
  • 승인 2014.12.18 02:42
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Seoul Korea - As the government instructed Korea Electric Power Corp. to cut electricty rates proportional to recent oil price fall, the state-run electricity utility is set to review the rate scheme. If electric power rates are indeed reduced within the year's end, it will be the first time in ten years since November 2004.

Earlier on the previous day, President Park Geun-hye said in a meeting of senior secretaries held at Cheongwadae (Presidential Palace), "The international oil prices have fallen more than 40 percent since June this year. I want policy makers to come up with ways to cut utility rates such as gas and electricity so that low-income families can feel relief even slightly."

Electric power rates have increased once or twice a year since 2010, including 3.5 percent in 2010, 4.9 percent in August 2011 and 4.5 percent in December 2011, 4.9 percent in August 2012, 4.0 percent in January 2013 and 5.4 percent in November 2013.

It is unclear whether the electricty rates will decline by a large margin as the President instructed. That's because the share of electric power generated through oil and gas takes only 26 percent in total. Other energy resources include nuclear power, bituminous coal, and anthracite. Without any change in the cost structure of the remaining 74 percent of energy sources, it is hard to adjust the electric power rates significantly.

Meanwhile, the market has already priced in the President's remarks and brought down the stock price of KEPCO. On the 16th, KEPCO shares were closed at 40,350 won, down 9.33 percent (4,140 won) from the previous day.

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