South Korea's main electricity supplier Korea Electric Power Corp. (KEPCO) recently asked the country's Ministry of Knowledge Economy (MKE) to allow an average 13.1 percent hike in electricity charges, as reported by South Korean media sources.
As electricity charges in South Korea last year went up by an average of 4.5 percent in August and 4.9 percent in December, it is feared that another hike would place a heavy cost burden on local steel producers.
Once the MKE decides there are grounds to increase electricity charges, it consults with other branches of government and, following the consultation process, electricity charges may be hiked within a month.
KEPCO has stressed that it is recording a loss of KRW 2-3 trillion (1.7-5.1 billion $) every year, as electricity charges fall short of power generation costs. KEPCO also said that its accumulated loss over the past four years has exceeded KRW 8 trillion (13,2 billion $) and that it is borrowing money every year.
The same as last year, KEPCO has this time also asked for a high rise in the charges of electricity for industrial use at large enterprises and for use in large-size buildings, whereas it has minimized its increases in charges of electricity for use in households and farms.
Local steelmakers have been cooperative to the government's policy, curtailing their steel production whenever electric power supply is scarce. However, they are now starting to become disaffected with KEPCO's attempt to apply high increase rates in its adjustment of electricity charges for industrial use.