I would like to talk today about the increase in electricity rates. It is an increase in electricity rates from May 2023. Electricity is the most essential and inseparable part of our lives. But this time, it is said that the electricity rate will increase by the largest width ever.
Let’s find out how much this electricity rate increase has been, why it has risen like this, and how to calculate the approximate cost of electricity.
Is it because of the deficit of Korea Electric Power Corporation?
Korea Electric Power Corporation was already in a dangerous state by alternating between deficit and surplus until 2020. As the accumulation of operating deficit continues to increase, from 5.8 trillion won in 2021 to 32.6 trillion won in 2022, even in the first quarter of this year, it recorded a deficit of 6 trillion won, continuing the deficit march for 8 consecutive quarters.
Electricity rate hike
The government and the ruling party, the People’s Power, held a party-government council on the 15th and raised the electricity rate by 8 won per kwh. This is the extent of the electricity rate increase in the second quarter of 2023, and KEPCO’s deficit is very serious by the end of the year, so additional hikes are foreseen. With this increase, the rate of increase in electricity rates is 9.5%, and a household of 4 using 307kwh of electricity per month will increase the monthly average by about 2,790 won.
The electricity rate hike in the second quarter was the largest ever, similar to last year when it raised a total of 19.3 won three times. However, the problem is that this impression is not the end. Experts are advising that in order to resolve KEPCO’s deficit, even excluding this increase, it should be raised by more than 30 won per kwh. Therefore, electricity rate hikes are likely to continue throughout the year.
Reasons for an increase in electricity rates
The main reasons for the increase in electricity rates are KEPCO’s cumulative deficit and rising fuel costs. As of the end of 2022, KEPCO is showing a cumulative deficit of 30 trillion won. This was caused by a decrease in the operation rate of nuclear power plants due to the nuclear phase-out policy and subsidies for new and renewable energy. KEPCO is predicted to have more losses of around 10 trillion won this year.
Even if the electricity rate is raised this time, the additional revenue that KEPCO will collect is 7 trillion won, so it is still insufficient to make up for the deficit.
Also, the price of f
uel used to generate electricity is rising. Fuel costs such as coal and liquefied natural gas (LNG) have risen by more than 40% compared to last year, and LNG prices in particular are skyrocketing due to a lack of supply and increased demand in the international market.
KEPCO adjusts the fuel cost adjustment rate every month, which reflects fuel cost, but the increase in fuel cost is so large that even if the rate increase is suppressed, the deficit is getting bigger and bigger. Therefore, the government and the ruling party are preparing specific measures to normalize KEPCO’s management and ensure the safety of energy supply.
How to save on your electricity bill
Due to the increase in electricity rates, the cost of living for the common people has increased significantly. For this reason, the most realistic way to save electricity bills is to reduce electricity consumption. This is because electricity rates are applied on a progressive basis according to usage. We will introduce you to real-life ways to further reduce these electricity bills.
1. Use power saving appliances or use low power mode / 2. Switch ON/OFF to cut off standby power that is still in use / 3. Set the temperature of the air conditioner to 26 degrees in the coming summer and use it with a fan / 4. TV or computer Lower the screen brightness and turn it off when not in use.
finishing up
Today, we learned about the electricity rate increase in May 2023. This increase is said to be an unavoidable measure due to rising fuel costs and the accumulated deficit of Korea Electric Power Corporation (KEPCO). In addition, for about 3.5 million households of vulnerable groups such as basic livelihood security recipients, please note that electricity rates will be frozen for 2023 only up to 313kwh, the average monthly consumption.