This photo, taken Jan. 24, 2023, shows gas meters of homes in Seoul. (Yonhap)
SEOUL, Feb. 16 (Korea Bizwire) — The government has announced plans to address the public’s grievances over soaring heating costs this winter by implementing measures to broaden household cashback programs and increase the number of beneficiaries.
The “home cashback” initiative, which was introduced this winter, provides households with refunds when they reduce their gas usage by over 7 percent compared to the same period in the previous year.
To help alleviate the financial strain on households, the government has lowered the requirement to over 3 percent, providing 30 won per cubic meter for savings of more than 7 percent, 50 won for savings of over 10 percent, and 70 won for savings of over 15 percent.
However, the cashback program has been introduced against a backdrop of a sharp increase in fuel prices, which includes electricity, gas, and heating costs that have risen by over 30 percent in the past year, marking the highest surge since the late 1990s financial crisis.
A pipe connecting to a boiler is covered with a blanket at a flophouse in Seoul’s Jongno Ward on Feb. 1, 2023. (Yonhap)
According to Statistics Korea, city gas charges alone spiked by 36.2 percent last month compared to the same period last year, marking the highest increase in nearly 25 years.
This has resulted in many households grappling with exorbitant heating bills and has triggered a wave of social unrest.
Beyond households, businesses such as saunas and restaurants that consume significant quantities of gas and electricity are also grappling with financial hardships.
For example, a women-only sauna in Seoul’s Jung Ward saw its gas bill for the period between Dec. 27-Jan. 31 rise to 3.8 million won (US$2,940), more than triple the previous month, despite operating a gas boiler for only four to five hours a day due to reduced customer demand amid the COVID-19 pandemic.
At the same time, the country’s state-run energy firms — Korea Electric Power Corp. (KEPCO) and Korea Gas Corp. (KOGAS) — are raising the salaries of their employees by hundreds of millions of won.
The companies have a combined 5004 employees making more than an annual salary of 100 million won (US$77,430), and with a total workforce of 27,000, on average, one in 5.5 employees earns an annual salary of 100 million won.
People take part in a protest organized by the minor progressive Jinbo Party in Seoul on Feb. 11, 2023, to lash out at the government for a recent spike in heating and energy bills. (Yonhap)
Despite this, both companies recorded their largest losses ever last year, with KOGAS’ outstanding loss surging to 9 trillion won at the end of last year, and KEPCO’s operating loss skyrocketing to 30.8 trillion won in 2022.
This has prompted concerns that the companies’ losses may ultimately be passed on to the public through higher rates.
Although KEPCO and KOGAS are said to be in discussions with government authorities on how to further increase fares this year, the public is expected to face a surge in heating bills in the coming years.
The core of the controversy is centered around the massive operating losses of the two companies, which are likely to burden the public with higher bills in the long run.
M. H. Lee (mhlee@koreabizwire.com)
