Electricity rates were raised 4.9 percent on average on Monday. As a consequence, an average urban household will have to pay 1,200 won more each month ― not a small burden for low-income families in particular. Businesses will be hit harder, with their energy bills raised more than 6 percent at a time when the global economy is in a protracted slump.
But the increase is too small to cover the cost. Korea Electric Power Corp., which sustained 2.9 trillion won in operation losses during the first half of this year, is reportedly considering raising rates by the end of the year again.
The administration says it permitted a minimum increase this time although an increase larger than 10 percent was needed to cover the cost, considering the burden it would have on households and businesses. What nonsense is this?
The government-invested power corporation demanded a 13.1 percent increase in April and revised it to 10.7 in July percent under pressure. But it was told again that an increase larger than 5 percent would not be permitted.
Undoubtedly, the administration believed that it would not be politically correct to permit the utility corporation to make a rate increase large enough to cover the cost when it told it to bring the increase below the 5 percent mark. It apparently looked all the more so, given the presidential election is set for December.
But the administration’s decision did not fool the electorate. People are well aware that it is only a matter of time before there is another increase in electricity rates because a price lower than the cost cannot be maintained permanently.
Under pressure from rising energy prices in the world markets last year, the power corporation raised electricity bills twice, of course with permission from the administration ― 4.9 percent in August and another 4.5 percent in December.
Here again, raising the rates in two installments made little economic sense, though it may have politically appealed. Rather, a raise in one fell swoop would have had a shock effect on the nation’s energy consumption at a time when the administration had been conducting an energy conservation campaign.
The administration should not attempt to deceive the electorate with piecemeal rate increases. This is not to say that the corporation has an unblemished record of management. The argument is not misplaced that it should have presented a restructuring plan when it called for a rate increase.
