Increased Power Charges Imminent for South Korean Industrial Users

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--At a time when the future direction of South Korea's power generation sector is under debate, state-run power utility Korea Electric Power Company (KEPCO) announced that it is considering an increase in its electricity charge to industrial users, due to massive losses following of a government initiative to control inflation.

From 2008 to the first half of 2013, KEPCO suffered $12.1 billion in losses. The company reported that it has been charging electricity and gas tariffs to industrial users at well below cost in recent years, in an effort to help curb inflation.

As a resource-poor and energy-hungry country, South Korea, Asia's fourth-largest economy, is now facing a reduction in the share of nuclear energy. A working group has recommended that plans to boost nuclear energy's share to 41% by 2030 should be scrapped, and that the power source should be capped at 22% to 29% of the total mix by 2035.

Imminent price hikes could hit as early as November, and KEPCO officials say that electricity tariffs should reflect costs. KEPCO data shows that industrial users were charged $0.08 per kilowatt hour (kWh) in 2012, compared with $0.10 per kWh for commercial users and $0.11 per kWh for residential users.

The negative prospects for the nuclear future of South Korea were worsened by the recent discovery of fraudulently certified components at nuclear plants, which have remained closed. More than 100 individuals involved in the component supply chain have been charged in the matter and will stand trial.

For related information, see October 4, 2013, article - South Korea Selects Lloyd's Register to Review Possible Forged Nuclear Certificates, and October 18, 2013 article - South Korea Looks to Energy Storage Systems to Beat Power Shortfalls.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.