Officials of Korea Electric Power Corp. monitoring the daily peak-time power usage should be breathing a sigh of relief as the heat wave begins to recede. Yet, they cannot afford to lower their guard, because the possibility of rolling blackouts cannot be ruled out during the next several weeks.
On the contrary, blackouts can strike the nation during off-season maintenance, as they did in September 2011. An unseasonable heat wave, when put together with a breakdown at one or two power plants, is a good recipe for a blackout.
Moreover, a shortage in power supply is not a passing problem but a chronic one. Given that power plants cannot be built in a short period of time, the nation will have to brace itself for blackouts next summer. Then, energy conservation will be stressed again.
But an appeal to the public for conservation alone cannot be a solution to the chronic power shortage. Instead, the nation will have to deal with the root cause of the problem ― the provision of electricity at an unreasonably low cost.
The ratio of electricity rates to production costs rose from 87 percent to 90.9 percent when KEPCO raised the rates 4.5 percent on average last December. In other words, KEPCO was still providing electricity well below cost despite the rate increase.
It raised the rates another 4.9 percent on Aug. 6. This time, the power company did not disclose the post-increase ratio of electricity rates to production cost. No matter where the ratio stood, the provision of electricity at unjustifiably low prices was undeniable. Held accountable were previous administrations, which pushed down electricity rates to curry favor with consumers on one hand and help boost exports on the other.
More often than not, the previous administrations, concerned about consumer inflation, had refused KEPCO’s requests to raise electricity rates for individual homes. Rate increases, when permitted, had been kept to the minimum.
Rates for companies had been pushed down for a different reason ― to help them maintain a competitive edge against their foreign rivals. According to a recent news report, the cost of electricity for industrial use in Korea was 37 percent of that in Japan and 41 percent of that in Germany.
This industrial policy has backfired, given that the industrial use of electricity in the nation shot up 35 percent from 2002 to 2009, compared with a mere 4 percent increase on average among OECD members.
Against this backdrop, the incumbent administration has recently agreed with the ruling Saenuri Party to raise rates both for homes and companies. But corporations are misguidedly putting up organized opposition to the proposed rate increases. They should be thankful for the favors they have received, instead of grumbling about the move to raise rates in October.