The government has decided to compensate losses due to its nuclear phaseout policy effectively with electric bills.
Criticism of the decision is inevitable in that the government will pass along to the people the cost of enforcing a misguided policy, despite concern and opposition from many quarters of society.
It selected five closed or suspended nuclear power plants whose losses it will make up for. They are Wolsong No. 1 in Gyeongju, North Gyeongsang Province; Daejin Nos. 1 and 2 in Samcheok, Gangwon Province; and Cheonji Nos. 1 and 2 in Yeongdeok, North Gyeongsang Province.
Compensation will come from a policy fund established to develop the nation’s electric power industry.
The scale of compensation is not determined yet, but according to the office of Rep. Han Moo-kyung of the opposition People Power Party, combined losses of the five reactors are estimated to reach 666.6 billion won ($557 million) -- 565.2 billion won for the Wolsong unit, 97.9 billion won for the Cheonji units and 3.5 billion won for the Daejin units.
The fund is to be raised from a quasi-tax consisting of 3.7 percent of the electric bills that people pay each month. Government officials say that compensation will not lead to an increase in electric rates because the existing fund amounts to about 4 trillion won.
But compensation will eventually become a burden on the people. It is unreasonable for people to pay the price for a government policy that causes losses in the electric power industry while paying bills to develop the industry.
The use of the fund was originally limited to seven fields, including the extension of grids to isolated and remote areas, the underground burial of above-ground lines, safety management and support for advances into overseas markets.
As the Korea Nuclear & Hydro Power Co., the Kepco subsidiary that owns and operates the country’s nuclear power plants, saw losses piling up due to the nuclear phaseout, the Moon Jae-in administration revised enforcement ordinances of the electric utility law in June to be able to spend it to make up for the losses. Kepco is the state-owned company with a monopoly on the country’s electric power industry.
The government revised the decrees not only to compensate for the losses, but also to finance Moon’s campaign pledge to open Kepco’s technology university, Kentech -- the Korea Institute of Energy Technology -- with the fund. It is questionable if it is proper to use the fund like that.
Shin Hanul Nos. 3 and 4 were excluded from loss compensation this time because the final decision on whether to suspend them has not yet been made, but if they are scrapped, total compensation of the seven units is estimated to exceed 1.4 trillion won.
The cost of the nuclear phaseout will be much greater than that, considering the unrealized economic gains expected from Shin Hanul Nos. 3 and 4. According to a research paper by KAIST professor Jeong Yong-hoon last year, if the construction of Shin Hanul Nos. 3 and 4 resumes and their operation is extended until 20 years after their life spans, their economic gains are expected to total 510 trillion won.
It is absurd to let a policy cause losses and make up for those while keeping the policy alive. Losses could have been avoided if the Moon administration had not stubbornly pushed the policy.
The fund was created to develop the electric power industry and serve the interests of electric power consumers. People cannot but feel as if they are unfairly bearing the consequences of a problem the government caused.
The nuclear phaseout is being called into question after the government set a goal of cutting emissions by 40 percent below 2018 levels by 2030, and to go carbon neutral by 2050. Moon may have received plaudits on the international stage for setting those goals, though they are prohibitively ambitious and ignore pleas from domestic manufacturers to lower the bar realistically.
The problem is that the government plans to attain its goals without the help of nuclear energy. Most experts agree that Korea has few alternatives as effective as nuclear energy in reducing emissions.
The policy to discontinue the use of nuclear energy will not only impose an immediate economic burden on people, but will also spoil the long-range climate change plan. Whoever takes power next must exit the policy.
By Korea Herald (email@example.com