Seoul: The state-run Korea Electric Power Corp. (KEPCO) announced on Monday its decision to freeze electricity rates for the first quarter of the upcoming year, despite recent declines in global energy prices. This move is part of KEPCO's strategy to enhance its financial stability.
According to Yonhap News Agency, KEPCO will maintain the adjusted unit fuel cost, a crucial component of the nation's electricity rates, at the maximum level of 5 won per kilowatt-hour (kWh) for the January-March period. This adjusted fuel cost has been consistent at 5 won since the third quarter of 2022.
The fuel cost adjustment unit price is calculated quarterly, with a permissible range of plus or minus 5 won per kWh, dependent on energy prices such as coal and liquefied natural gas (LNG) from the previous three months. Despite the recent decrease in fuel prices, KEPCO initially considered reducing the cost to -13 won per kWh.
KEPCO stated that government directives advised maintaining the current rate of 5 won per kWh in the first quarter, given the company's financial condition and the substantial amount of unadjusted fuel cost charges previously incurred. The company has been urged to persist in its efforts to normalize its management.
The financial difficulties faced by KEPCO began when it continued to supply electricity at prices below production costs, even as global energy prices surged between 2021 and 2023 owing to the Russia-Ukraine conflict. As of the end of June, KEPCO's accumulated debt reached 206.2 trillion won (US$139.2 billion).