The Korea Electric Power Corp., the state-run electricity provider, last week unveiled a plan to revamp its billing system by adopting flexible rates linked to global prices of fossil fuel resources next year.
Under the new plan endorsed by the government, electricity fees will be adjusted every three months, reflecting changes in the prices of oil, liquefied natural gas and coal.
Kepco said in a statement that the current fixed-rate billing system has failed to reflect fluctuations in production costs in a timely manner.
The new system is expected to encourage users to cut their electricity consumption when the prices of resources are high, while providing it at more affordable rates when the costs fall, according to the company.
But critics say it is designed primarily to put the burden of the ill-conceived energy policy pursued by President Moon Jae-in’s government on the shoulders of consumers.
Since taking office in 2017, the Moon administration has pushed to phase out nuclear power generation in the country, ignoring public preference for the stable source of cheaper energy.
A blueprint for the nation’s energy mix for 2020-2034, which was unveiled earlier last week, calls for reducing the number of nuclear power plants from the current 24 to 17. Accordingly, nuclear power is set to decrease in proportion to South Korea’s overall electricity generation capacity over the cited period, from 25.6 percent to 10.4 percent.
Renewable energy will account for 41.9 percent in 2034 and LNG 31.8 percent, up from 6.5 percent and 25.9 percent in 2020, with coal planned to decrease from 40.4 percent to 15.6 percent during the same period.
The respective costs of producing electricity from LNG and renewables, such as solar panels and wind turbines, were about three and four times higher than that for nuclear power generation last year, according to a study by the National Assembly Budget Office.
The Moon government’s push to replace nuclear power with LNG and renewables over the past three years has already driven Kepco into financial difficulties. The company, which recorded an operating profit of 12 trillion won ($10.9 billion) in 2016, suffered a loss of 1 trillion won last year, with its outstanding debt growing from 104 trillion won to 128.7 trillion won over the cited period.
In the first three quarters of this year, its operating profit went into the black, posting 3 trillion won, largely due to a steep fall in global prices of fossil resources amid the coronavirus pandemic-caused downturn in the world economy.
The company said the revamped scheme would not lead to an immediate increase in electricity fees, forecasting the combined bills charged would fall by 1 trillion won by the first half of 2021. But electricity charges are likely to rise again further down the road to reflect a possible hike in oil and LNG prices when the global economy is back on track with vaccine distributions bringing the COVID-19 pandemic under control.
The new billing system includes two other changes that will increase the burden to be shouldered by electricity consumers.
Discounts provided mostly to one- and two-member households will be gradually abolished, and the additional costs of expanding renewable electricity generation will be reflected in utility bills.
A rise in electricity prices will not only increase financial burdens on households struggling to make ends meet, but also weaken the international competitiveness of local manufacturing firms. Implementing the policy to phase out nuclear power generation will push up electricity fees at an accelerating pace in the coming years.
The nuclear phaseout drive also contradicts the Moon administration’s pledge to achieve the goal of carbon neutrality by 2050. It will be virtually impossible for Korea to effectively reduce carbon emissions to zero by the target year if it increases LNG-fueled power generation to make up for a reduction in nuclear energy, which emits no greenhouse gases.
Major countries, including China and Japan, are planning to build more nuclear power plants to accomplish their carbon zero goals.
The Moon government should depart from its nonsensical adherence to the nuclear phaseout policy and redouble efforts to work out the best energy mix for the nation.