SEOUL, March 29 (Korea Bizwire) — South Korea’s state-run Korea Electric Power Corp. (KEPCO) said Tuesday it will freeze the adjusted unit fuel cost, a key part of the country’s electricity rates, in the second quarter despite high energy prices amid rising inflation.
KEPCO said it has decided to set the adjusted unit fuel cost at zero won per kilowatt-hour for the April-June period of this year, the same as that three months earlier.
The company proposed a 3 won (US$0.002) increase in the adjusted unit fuel cost, citing soaring global energy costs, but the government rejected it amid high inflation, KEPCO said.
In accordance with the decision, the electricity rate will go up 6.9 won per kWh starting next month, as the government earlier decided to raise the prices linked to climate change and other costs.
“The government said it needs to seek price stabilization for the people who have difficulties due to the prolonged COVID-19 pandemic and high inflation,” KEPCO said in a release.
Late last year, KEPCO adopted a flexible electricity rate system linked to global fuel prices in a move to improve its profitability. It previously charged an electricity rate under a fixed-rate electricity billing system.
Under the new system, the billing system of electricity is adjusted every three months, depending on global prices of liquefied natural gas, coal and crude oil.
KEPCO said the operation cost for the April-June period surged 72.6 percent compared with last year’s average.
According to government data, import prices of Dubai crude oil, South Korea’s benchmark, closed at $115.60 per barrel Thursday, up from the upper $70 range at the end of last year and the lower $50 band in January 2021.
As the government has refrained from raising the rate despite high fuel prices, KEPCO reported a record yearly loss of 5.86 trillion won last year.