Ministry plans to cut electricity bill by 11 percent

Under the current system, residential electricity bills are cumulatively charged under six brackets based on power usage, with the top rate 11.7 times higher than the lowest one. Industries, which account for over half of the total electricity consumption here, are exempt from the cumulative system.

The new system will have only three brackets, with the top cumulative rate 3 times higher than the lowest.

This is the first time in 12 years for the government to revamp the power charge system.

In the first scenario, the ministry would reduce the basic power rate by 20 percent for the lowest bracket and keep the top rate at three times higher. The second scheme eliminates the cumulative rate on power consumption while the third plan is a mixture of the first two options.

All of the three scenarios are expected to cut power charges by about 11 percent while decreasing profits of power operator Korea Electric Power Corp. by up to 920 billion won ($780 million), the ministry said.

The ministry has reported the new power bill system scenarios to the National Assembly. The lawmakers will decide on one of them next month after a review.

The new power charge system will retroactively come into effect from next month, it added.

As public criticism over the controversial power bill system has grown every summer, especially during the heat wave this year, the government and ruling Saenuri Party launched a task force to revamp the system.

Aside from the government’s moves, nearly 30,000 power consumers launched a legal battle against Kepco, either individually or collectively, to seek refunds of the state-run company’s “unfair profits.”

The Seoul court, however, ruled in favor of Kepco last month in the first ruling, saying the company’s policy terms that allow the cumulative power bill increase based on consumption is valid.

Rulings for similar cases are still pending.

By Lee Hyun-jeong (rene@heraldcorp.com)