Debate over an additional increase in electricity rates for corporate users has been escalating since a high-ranking official from the Energy Ministry unveiled a policy guideline to advance the nation’s electricity pricing system early this week.
The ministry has sought to raise the nation’s cheap electricity rates in an effort to curb soaring power demand.
In a press meeting on Tuesday, Han Jin-hyun, a vice minister for trade and energy, said the ministry would announce a new electricity pricing system next month, under which the business electricity rates will be raised, while six-pricing levels for household power users will be simplified. The vice minister, however, didn’t mention about the level of increase in business electricity rates.
“The business circles are against the proposal, claiming that they saw a 25 percent hike in their power bill over the past two years, but their electricity bills are still smaller than those for companies in OECD member countries,’’ Han said.
Regarding the ministry’s move to raise business electricity rates, industry watchers are divided into two groups.
In a public hearing session, organized by ruling Saenuri Party on Wednesday to discuss options in advancing the electricity pricing system, Lee Duck-hwan, a professor from Sogang University, urged the government to reconsider a raise in business electricity rates, underlining a possible decline of industrial competitiveness and mounting pressure on consumer prices.
He continued to say, “There is perception that business electricity rate is cheaper than that of household rates, but it is not true.”
“As of now, the business electricity rate per kilowatt-hour, or kWh, is 93 won, while households pay 124 won per kWh. However, in reality, companies pay more as they have to cover the cost for building power transmission and distribution facilities and maintenance required for their power usage, different from households.”
In contrast to Lee, Hong Joon-hee, a professor from Gachon University, backed the government’s plan to raise business electricity rates, claiming that companies, which have taken advantage of discounted power rates for decades, need to shoulder a bigger burden than households.
“In particular, the government has to raise electricity bills of leading power consumers in the upper 2 percent by 10 percent per year for the next five years,” Hong said, urging companies to find ways to raise energy efficiency, while accepting the hike in their power bills.
Amid heated debate over the revision of the electricity price system, business and industry associations are strongly raising their voice against the bill, strengthening their lobbying activities for the National Assembly.
When the revised bill is passed, the steel industry is expected to be hit hardest. According to a recent survey by the Korea Electric Power Corp. on the power consumer ranking in the corporate sector, Hyundai Steel topped the list last year, followed by POSCO. Samsung Electronics and Samsung Display were ranked third and fourth.
By Seo Jee-yeon (firstname.lastname@example.org