The government and the ruling People Power Party (PPP) agreed Monday to carry out a set of support measures aimed at easing energy cost burdens on households ahead of an upcoming hike in electricity and gas rates.

The government plans to raise electricity and gas rates for the second quarter, resulting in an estimated additional monthly cost of 3,000 won (US$2.24) and 4,400 won, respectively, for an average four-member household.

This decision comes after a delay of over a month due to public opposition, despite soaring global energy prices and the snowballing losses of state utility firms.

“The government and the ruling party have agreed that the increase in electricity and gas rates can no longer be postponed,” Rep. Park Dae-chul, the PPP’s chief policymaker, told reporters.

To mitigate the impact on energy-vulnerable households, including recipients of the government’s livelihood support, basic pension, or disabled pension programme, the increase will be reduced.

Socially-vulnerable households falling within the low-income bracket will be exempted from the rate hikes for the next one year.

Park further mentioned that small-sized merchants and manufacturers in key industries will be able to pay the increased amount in monthly installments. As for farmers and fishermen, the increased amount will be applied at a later date.

The hikes come as the state-run Korea Electric Power Corp. (KEPCO) announced self-rescue measures, including asset sales and a freeze in wages, in a bid to improve its financial soundness amid snowballing losses caused by soaring energy costs.

The government raised electricity rates for the first quarter by 13.1 won per kilowatt hour, the sharpest hike in about four decades, in a move to help KEPCO narrow its losses.

But late in March, the government and the PPP decided to put off the planned announcement of the electricity rates for the second quarter, citing the need for more time to review “related circumstances.”

Last year, the government was not able to raise the energy rates enough to cover soaring costs amid high inflation, and growing public burdens over the COVID-19 pandemic and an economic slowdown.

https://en.yna.co.kr/view/AEN20230515002400315

Category: Korea