Public Utility Bills Freeze in the First Half of the Year

Public utility bills including electrical charges, water rates, and highway fees will freeze in the first half of this year and a price cap will be introduced.

The government announced the plan to curb inflation at the National Assembly on Thursday after holding a government-ruling party policy conference.

After the government predicted that the price hike will be higher in the first half of the year compared to that of the rise posted in the latter half of 2007, the decision was finalized to freeze the central public utility bills.

Additionally, the government decided to lead the communications companies to lower prices voluntarily by easing regulations and encouraging competition while reducing the heating bills by lowering LPG prices in winter. In particular, a price cap on the public utility bills will be imposed for two to five years to discourage government-sponsored corporations to hand over the increased cost incurred by lax management to bills.

“Until now, the cost and other price-hike factors have been included in the bill. However, the imposition of the price cap will encourage the government-sponsored enterprises to reduce costs voluntarily,” said an official of the Finance and Economy Ministry.

Provincial governments are to consult with private experts before increasing water rates, garbage bag prices and public transportation fees including buses, taxies, and subways.

The government is also considering lowering the quota tariff of major grains such as wheat and corn in the first half of the year to stabilize soaring prices.

To curb skyrocketing oil prices, it plans to unveil real-time oil prices of all gas stations in Korea and to introduce an oil futures market to help the market principles work efficiently when setting the prices. Oil futures market is expected to reduce oil price fluctuation risks for the wholesalers.

Moreover, the government decided to crack down on private cram schools that demand high tuition fees, and expand financial support for those who live in the region where rents are likely to increase.

The government will form a Task Force to carry out the plans and come up with additional measures after conducting a monthly price movement review.

It came up with comprehensive measures due to soaring prices in raw materials and international grain prices with the forecast that consumer prices will rise by 3.0 percent, 0.5 percent higher than the previous year.

jarrett@donga.com