Simultaneous hike in electricity and gas rates after next year’s presidential election… Adjusted for cost increase

An electricity meter installed in an officetel in Seoul on the morning of the 20th. news

From next spring, electricity and gas rates will rise at the same time.

The government has set a policy to freeze public utilities, including electricity rates, until the first quarter of next year due to concerns about inflation. Gas rates went up.

KEPCO[015760]announced on the 27th that it will raise the standard fuel cost for next year by 9.8 won per kilowatt-hour (kWh) in two parts.

First, it will raise 4.9 won, which is half of the increase, in April next year, and raise the rest in October.

The standard fuel cost to be upgraded this time is determined according to the fuel cost trend in the previous year. KEPCO explained that international oil prices, bituminous coal, and natural gas prices all recorded double-digit increases from December last year to November this year, causing a factor in raising the standard fuel cost.

In addition, KEPCO will also raise the climate and environment fee, which reflects environmental policy costs, by 2 won from the current 5.3 won per kWh to 7.3 won from April next year.

The increase in climate and environment rates was made in consideration of the increase in the mandatory fulfillment rate of the Renewable Energy Supply System (RPS), the increase in the paid allocation rate of greenhouse gas emission rights, and the implementation of the upper limit for coal power generation.

Accordingly, from April next year, electricity rates will increase in stages.

KEPCO explained that the effect of a 5.6% electricity rate increase is expected as of next year.

When the base fuel cost and the increase in climate and environment rates are combined, the monthly average electricity bill burden for a four-person household (based on average monthly consumption of 304 kWh) is expected to increase by 1,950 won.

However, electricity rates will be frozen in the first quarter of next year.

Previously, KEPCO announced on the 20th that it had set the final fuel cost adjustment unit price for January to March next year at 0 won per kWh, the same as in the fourth quarter.

The electricity rate is determined by adding up the basic rate, electricity rate (standard fuel cost), climate environment rate, and fuel cost adjustment unit price.

According to the fuel cost interlocking system, the adjusted unit price was frozen in the first quarter, but as the base fuel cost rises this time, the electricity rate will rise from the second quarter.

Korea Gas Corporation[036460]Settlement of raw material cost for civil (home use) in 2022 with the content that the unit price of gas per megajoule (MJ, gas used unit) will be raised three times to 1.23 won in May, 1.9 won in July, and 2.3 won in October next year The unit price adjustment plan was approved on the same day.

According to this adjustment plan, which will be applied from May next year to April 2023, the settlement unit price, which is currently 0 won, will increase by 1.23 won from May to June next year, and 0.67 won from July to September, raising 1.9 won. The gas rate is calculated by adding fuel and supply costs to the settlement unit price.

When this adjustment is applied, the average monthly consumption burden of consumers will increase by 2,460 won in May, 1,340 won in July, and 800 won in October, respectively, based on the average monthly usage of 2,000 MJ.

Based on the average monthly consumption of 2,000 MJ, the total monthly average burden will increase by 4,600 won from the current 28,450 won to 33,50 won after October next year, the KOGAS explained.

As such, public rates will increase one after another from next year, but the timing of the increase is set after the first quarter of next year.

It is also raised in stages with a time lag.

This is a measure in consideration of the fact that if the increase is reflected at once, the burden on the public will increase sharply.

It is for this reason that the base fuel cost of the electricity rate is reflected in two phases in April and October of next year, and the gas rate is raised in three stages from May next year.

KEPCO and KOGAS announced that this unit price adjustment is expected to improve financial soundness.

As KEPCO announced that it would suspend electricity rate hikes in the first quarter of 2022, interest in whether to raise other utility rates such as city gas is drawing attention. The city gas rate for private use (housing and general use) used at home is also affected by the rise in international oil prices, but it has been maintained since the price was lowered in July last year in consideration of the economic situation. The photo shows a gas meter installed in a residential area in Seoul on the afternoon of the 20th. news

In a press release, KOGAS said, “The 1.8 trillion won in fuel receivables accumulated by the end of this year will be recovered within two years due to the increase in the settlement unit price, which will improve financial soundness.”

KEPCO emphasized that it will form an emergency response committee to respond to financial crisis next year to improve management efficiency and closely review and implement new technologies and new construction methods, cost savings through improved facility efficiency, asset sales, and business restructuring.

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