State-run Korea Electric Power Corp. (Kepco) said Thursday it will revamp its billing system by adopting flexible rates linked to global prices of resources next year, in a move to improve its profitability.

"The current billing system failed to reflect fluctuations in production costs in a timely manner," Kepco said in a statement.

"It has also remained unchanged since 2013 and also failed to notify consumers of additional prices linked to climate change," it added.

South Koreans are currently charged under a fixed-rate billing system.

The new system will induce users to cut their power consumption when the price of resources remains high, while providing them with more affordable rates when the costs fall, according to Kepco.

Kepco said it plans to adjust the billing table every three months by reflecting prices of liquefied natural gas, coal and oil.

The company pointed out that the change will not immediately lead to a price hike, saying the combined bills charged will fall by 1 trillion won ($916 million) by the first half of 2021.

The government can also choose to delay adjusting electricity bills when the global oil prices spike in a short period.

Kepco said it will also gradually abolish discounts provided to small households and instead expand benefits for the low-income bracket.

The country's sole power supplier has recently enjoyed improved profits on the back of the falling global price of oil amid the COVID-19 pandemic.

Kepco reported operating losses of 208 billion won and 1.2 trillion won in 2018 and 2019, respectively, before turning to the black this year. (Yonhap)