Raise of Industrial-Agricultural Electric Charges

From 2004, the industrial and agricultural electric charges will be largely raised, but the house electric charge will go down. Also, the midnight electricity rates discount will vanish.

On August 26, Korea Energy Economics Institute (KEEI) announced ‘the electric charges structure reorganization bill’ which was made through service of the Ministry of Commerce, Industry and Energy (MOCIE).

MOCIE will decide the reorganization bill by the end of the year by collecting opinions through having public hearings 8 times in the country such as Seoul, Busan and Daegu. Then, MOCIE will execute the reorganization bill from 2004.

According to the reorganization bill, the industrial electric charge which is 96.1% of production cost will be raised to 106.4% which is the average costs recovery rate (electric charge rate to the cost). The industrial charge will be raised by 10.7%.

The agricultural electric charge will be raised by approx. 120% as the government will abolish the reduction benefit on charges of the farm stuff growing, stock raising and the fish farm except charges for the pumping equipment.

In terms of the midnight electricity rates which have been raised by 40 won from 28.10 won (summer) per kWh ∼31.20 won(winter) per kWh since 1984, the midnight electricity rates discount will be abolished.

Besides, the house electric charge which is relatively high, compared production cost will go down by 7.3%, decreased to the level of the average recovery rate from 114.8% of the cost recovery rate. Especially, applied to a shopping building, office and public buildings, the general charges will be reduced by 20%.

From next January, large-sized companies which have used over 50,000kw, will be capable to purchase the electricity from Korea Power Exchange not through Korea Electric Power Corporation (KEPCO) for direct power dealing.

Gim, Gwang-Jung, the assistant manager of electric consumer protection, MOCIE said, “The current charges system needs to be changed into the charge system based on the cost because there will a perfect competition system in terms of the development and power transmission & distribution according to the power industry structure reorganization. After the charge system reorganization, whole electric charges payment will be reduced.”

However, there could be pains in the reorganization process because of high electricity burdens of the industry and farming & fishing people.

Ja-Ryong Koo bonhong@donga.com