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The Korea Electric Power Corp. announced Friday that its board of directors has agreed to increase electricity charges by an average of 4.9 percent from as early as September, with additional hikes being considered within the year.
The fee hikes, implemented differently across industries, would amount to 7 percent for businesses, 3 percent for homes and 3 percent for the agricultural sector, according to the state-run power company KEPCO.
KEPCO, calling the long freeze in electricity prices the main source of its widening deficit, had earlier proposed raising the charges by 10.7 percent last month, but the proposal was rejected by the government.
“I agree to moderate fee hikes. But the growth rate should not exceed 5 percent,” Knowledge Economy Minister Hong Suk-woo said at the time, citing the current economic slowdown and soaring consumer prices here.
The 4.9 percent increase proposal will be reported to the Ministry of Knowledge Economy for final approval from the government. A new pricing plan for electricity bills is expected to take effect from as early as Sept. 6, the ministry said.
The fee hike is the third of its kind over the past year. The KEPCO had already raised electricity prices by 4.9 percent and 4.5 percent in August and December last year, respectively.
The KEPCO board said, however, it would consider additional price hikes within the year. Following the new plan, the company expects to see its net deficit of 3.5 trillion won ($3.08 billion) last year narrow to 2 trillion won.
Industry sources say disputes over raising electricity prices would continue as companies are resisting fiercely to bear more financial burden at this time of economic downturn, raising doubts about the proper level of electricity fee rates and how it is decided.
According to a study by the Federation of Korean Industries, the electricity price for industrial use has increased 61 percent, while those for households and other sectors like individual offices and stores saw only 4.1 percent and 11.4 percent increases respectively over the past 10 years.
By Lee Ji-yoon (jylee@heraldcorp.com)
The fee hikes, implemented differently across industries, would amount to 7 percent for businesses, 3 percent for homes and 3 percent for the agricultural sector, according to the state-run power company KEPCO.
KEPCO, calling the long freeze in electricity prices the main source of its widening deficit, had earlier proposed raising the charges by 10.7 percent last month, but the proposal was rejected by the government.
“I agree to moderate fee hikes. But the growth rate should not exceed 5 percent,” Knowledge Economy Minister Hong Suk-woo said at the time, citing the current economic slowdown and soaring consumer prices here.
The 4.9 percent increase proposal will be reported to the Ministry of Knowledge Economy for final approval from the government. A new pricing plan for electricity bills is expected to take effect from as early as Sept. 6, the ministry said.
The fee hike is the third of its kind over the past year. The KEPCO had already raised electricity prices by 4.9 percent and 4.5 percent in August and December last year, respectively.
The KEPCO board said, however, it would consider additional price hikes within the year. Following the new plan, the company expects to see its net deficit of 3.5 trillion won ($3.08 billion) last year narrow to 2 trillion won.
Industry sources say disputes over raising electricity prices would continue as companies are resisting fiercely to bear more financial burden at this time of economic downturn, raising doubts about the proper level of electricity fee rates and how it is decided.
According to a study by the Federation of Korean Industries, the electricity price for industrial use has increased 61 percent, while those for households and other sectors like individual offices and stores saw only 4.1 percent and 11.4 percent increases respectively over the past 10 years.
By Lee Ji-yoon (jylee@heraldcorp.com)
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Articles by Korea Herald
