2nd quarter fuel cost adjustment unit price -3 won per kWh… Up to 1,50 won per month cut for 4 people
Global economic recovery and rising international oil prices are expected to inevitably raise rates in the mid- to long-term
The government and KEPCO delayed an increase in electricity rates in the second quarter of this year to stabilize people’s lives. Accordingly, the fuel cost adjustment unit for the second quarter was set at -3.0 won per kWh following the first quarter. However, in the long run, it is forecast that it is difficult to put a brake on the rising trend of electricity rates.
On the 22nd, KEPCO announced the calculation of the fuel cost adjustment unit price for the second quarter (for April-June) on the KEPCO website.
This is the second adjustment since the introduction of the cost-linked rate system (fuel cost indexing system) this year.
Considering the rising trend in fuel costs over the previous three months, electricity rates for the second quarter were expected to rise in seven years after November 2013.
The fuel cost indexing system reflects the fuel cost related to electricity production, such as liquefied natural gas (LNG), coal, and oil, in the electricity rate every three months.
The change in fuel cost is the value obtained by subtracting the’standard fuel cost’ from the’performed fuel cost’. The actual fuel cost refers to the average fuel cost for the previous three months, and the standard fuel cost refers to the average fuel cost for the previous year.
According to KEPCO, the price of bituminous coal averaged 113.61 won per kg after tax, LNG price 508.97 won, and BC oil 442.64 won for the last three months (last December to February this year).
Compared to the first quarter earnings fuel cost of 108.65 won for bituminous coal, 350.24 won for LNG, and 373.33 won for BC oil, all rose significantly.
Reflecting this increase, the actual 2Q fuel cost adjustment unit price is -0.2 won per kWh.
However, the government has kept it at -3 won following the first quarter.
Adjusted unit price in 2Q is also negative, but it seems to have taken into account the fact that the rate will increase compared to the previous quarter as the cut was reduced compared to the previous quarter.
KEPCO said, “The fuel cost adjustment unit price adjustment factor occurred due to the rise of international oil prices. “I received a notice of reservation from the government in order to promote the stability of the lives of the people.”
Earlier, the government introduced a fuel cost indexing system and announced a policy to delay rate adjustment in exceptional circumstances such as a sharp rise in oil prices within a short period of time.
The decision to hold this time seems to reflect concern that an increase in electricity rates may stimulate public prices.
In addition to the fact that the economy of the common people is difficult due to Corona 19, it is judged that there is a concern that the burden of the common people may increase if even the public charge rises in a situation where the price of the table is rapidly jumping.
Accordingly, in the second quarter, if a 4-person household using an average of 350 kWh per month, it is expected that the cut effect will continue by up to 1,50 won per month.
However, with the recent global economic recovery, international oil prices are on an uptrend, and it is generally expected that an increase in electricity rates will be inevitable in the future.
The government may use the reservation authority again, but in this case, there are concerns that the purpose of introducing the fuel cost index system, which is to rationalize electricity rates, will be unclear.
Reporter Kim Ji-eun
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