This is the second increase following the 4.9% increase in August 2011.
On December 2, the Ministry of Knowledge & Economy (MKE) announced its plan to raise electricity prices except for residential, agricultural and traditional market prices.
In consideration of the impact on the working class, farmers and on prices, due to U.S.-Korea FTA, MKE froze residential, traditional market and agricultural fares, but raised industrial and general high-voltage fares for the large electric consumers.
As an example, industrial rates escalated 6.5％ on average (high-voltage 6.6％ and low-voltage 3.9％), whereas general fares surged 4.5％ on average (high-voltage 5.0％ and low-voltage 3.9％).
As the industrial high-voltage electricity rates are set to increase by 6.6%, large conglomerates will feel heavy burden.
Electricity prices for residential use and streetlight were increased by 4.5％ and 6.5％, respectively. Adding that to the 4.9% increase last August, it accounts for an annual increase of 9.62%. This marks the first time in 30 years that electricity rates have been raised twice in one year.
The electricity tariff system is also seasonally adjusted. To significantly cut down demand during the peak hours in wintertime, MKE decided to charge high rates on wintertime peak hours. Consequently, targets for peak-hour rates will be largely expanded from 13,000 households over 1000kW to 111,000 households.
Additionally, to lessen burden on the industries, incentives will be given to companies that temporarily move the weekday business hours to Saturdays during the wintertime supply period.
In order to reduce burdens on businesses due to this electricity tariff adjustment, incentives will be offered to companies who cooperate with lowering peak-hour power consumption by temporarily moving their weekday business hours to Saturdays during the wintertime supply period. If a company enters into a demand management agreement and transfers its peak-hour loads from weekdays to Saturdays, it will be charged with the mid load rates on Saturday, which is 30% lower than the peak load rates, and it is likely to reduce their electricity bill.
Incentive fares will temporarily operate during the wintertime period only but may continue going forward after MKE analyzes load transfer effects. Jaehun Jeong, Head of the Energy Resource Division at MKE, claimed, “MKE, KEPCO and power plants will make their very best efforts to stabilize the power supply so that the people and companies can concentrate on their work without worries this winter by thoroughly carrying out the power supply stabilization measures and national energy saving measures along with this electric fare adjustment. Please actively participate in our efforts to overcome the power crisis.”
MKE projects this fare adjustment will not affect consumer prices thanks to frozen residential rates for working-class people but it will boost the producer price index by 0.116%p and costs of manufacturers by 0.076%p.