Starting from January of next year, the fuel cost indexing system will be implemented, which periodically reflects fluctuations in fuel costs used for electricity production in electricity rates.
It is a structure in which electricity rates go down or go up depending on fuel costs, and consumers are expected to benefit from electricity rate cuts right away as they are introduced at the time of low oil prices.
From next year, the cost of climate and environment is also separately announced as a separate item on the electricity bill, allowing consumers to transparently know the environmental cost of electricity production.
The Ministry of Trade, Industry and Energy and the Korea Electric Power Corporation announced today (17th) a plan to reorganize the electricity tariff system.
First of all, the'Fuel Cost Adjustment Charge' item was newly added to the electric charge, and the change in fuel cost every quarter is reflected in the electric charge every three months.
Fuel cost is calculated based on the customs clearance prices for liquefied natural gas (LNG), coal and oil announced by the Korea Customs Service.
The current electricity tariff system has been operating without adjustment since 2013, not reflecting changes in cost such as oil prices in time.
In order to prevent consumer damage and confusion, such as rapid rate hikes or cuts due to the implementation of the fuel cost indexing system, the government has put protection measures such as limiting the adjustment range to a certain limit and not reflecting slight changes in fuel costs on a quarterly basis.
In addition, in the event of an exceptional situation such as a sharp rise in oil prices within a short period of time, the government plans to withhold the rate adjustment.
An official from the Ministry of Industry said, "As fuel cost fluctuations are periodically reflected in electricity rates, the price signal function is strengthened," and said, "Consumers' predictability for electricity rate adjustments increases, which induces reasonable electricity consumption."
The government recently lowered the fuel cost adjustment fee due to low oil prices, and it is expected that a total of 1 trillion won will be cut in the first half of next year.
However, if oil prices rise sharply, it may be a factor in raising electricity bills.
Climate and environment related expenses are also separated and notified in separate items.
Currently, it is included in the electricity bill, so consumers could not know the climate and environment related costs.
Climate·environmental cost refers to the cost spent by power generation companies to reduce the impact of environmental pollution, such as the cost of fulfillment of new and renewable energy (RPS), transaction cost of greenhouse gas emissions (ETS), and the cost of reducing coal power generation following the implementation of the fine dust seasonal management system Say.
The government expects that if these costs are marked on the bill to make it easier for consumers to understand, the government will raise awareness of the intent and cost of the system for eco-friendly energy and widen consensus on energy conversion.
As climate and environment costs are expected to increase, the government plans to review ways to adjust the total cost of electricity bills, including the change in cost, when assessing the total cost of electricity every year.
The electric bill system for houses has also been modified.
The'required residential use deduction discount system', which provides a certain amount of discount for households using less than 200 kWh per month, will be abolished in July 2022 by gradually reducing the discount amount.
It was introduced to ease the burden of electricity bills for low-income families, but contrary to its original purpose, it was pointed out as a problem because discounts were concentrated on high-income households with 1 or 2 people who use less electricity.
We are introducing seasonal and hourly rate plans that are currently applied to industrial applications as well.
Considering the penetration rate of residential smart meters (AMI) that can measure the amount of use by time, we plan to implement them in Jeju first, and then expand the applicable areas in stages.
(Photo = Courtesy of the Ministry of Trade, Industry and Energy, Yonhap News)