Kim Sung-hwan, Minister of Climate, Energy and Environment, signaled a possible reduction in industrial electricity rates, saying, "Considering that our industries are competing with China, there is a need to lower and stabilize industrial electricity rates." He also said the government would accelerate projects closely tied to regions, such as building transmission networks, public incinerators, and integrating state-run power generation companies, now that the local elections are over.
Kim announced these plans at a press briefing held at the Government Complex Seoul on the 4th. Regarding industrial electricity rates, Kim first stressed, "Looking at major countries, industrial electricity rates, which must compete internationally, tend to be lower than other rates, but in Korea, industrial rates alone were unilaterally raised under the Yoon Suk-yeol government, making industrial rates the most expensive." He added, "This must be corrected."
Indeed, according to Korea Electric Power Corporation (KEPCO), the average selling price of industrial electricity rates as of last year was 181.9 won per kWh (kilowatt-hour), a sharp rise of 8.2% from the previous year. By contrast, industrial electricity rates in China and the United States remain in the range of 120 won per kWh.
Kim said, "Petrochemical complexes and steel mills do not benefit from seasonal and time-of-use pricing, so we will support these places through a regional differential pricing system." He added, "We will differentiate electricity rates by considering three factors: transmission network costs, power self-sufficiency, and balanced national development."
At the same time, the government said it is reviewing measures to control prices so that energy prices do not rise if the war in the Middle East drags on. Kim said, "The current system marginal price (SMP) for electricity is in the range of 120 won per kWh, falling short of the annual average SMP (146 won) at which KEPCO's deficit becomes a concern, so KEPCO's burden is not significant." Still, he added, "However, we are internally reviewing policies such as a price cap and ex-post settlement system to ensure that private power generators do not reap excessive profits if the SMP rises."
Kim also hinted at the possibility of reforming EV subsidies. He explained, "Last year, 200,000 electric vehicles were sold, and this year 350,000 to 400,000 are expected." He added, "Based on the current trend, there is a very high possibility that the subsidy budget will run dry around August or September." He stressed, "We will actively review measures such as converting subsidies into a fund, in close consultation with the Ministry of Planning and Budget, so that electric vehicles can be supplied to meet the demand consumers want."
In addition, the government plans to handle pending issues that were postponed until after the local elections with momentum in the second half of the year. Kim said, "Now that the local elections are over, we will ensure the East Seoul converter station issue is resolved reasonably at an appropriate time with the residents of Hanam, Gyeonggi Province, the Hanam mayor, and the Gyeonggi governor." He added, "On the issue of integrating the five state-run power generation companies, we will give an interim report on the research findings within this month and continue full-fledged discussions."
