As international natural gas prices soared and the won/dollar exchange rate skyrocketed, the government began reviewing the October city gas rate hike in a way that was wider than originally planned.
According to the government and energy industry, the Ministry of Trade, Industry and Energy will raise city gas rates in October and is discussing the level of increase with the Ministry of Strategy and Finance.
At the end of last year, the government decided to raise the settlement unit price three times this year alone, and according to this decision, it has already been raised from 0 won to 1.23 won in May and from 1.23 won to 1.90 won in July.
It is expected to increase from 1.90 won to 2.30 won in October.
However, as the receivables of KOGAS exceeded KRW 5 trillion due to the recent surge in gas prices, the government decided to raise the standard raw material cost as well, stating that it would be difficult to resolve the receivables only with a slight increase in the settlement unit price in October.
The city gas fee consists of the raw material cost, which is the import unit price of liquefied natural gas and LNG, which are raw materials for power generation, and the wholesale and retail supply cost, which is the sum of the supply cost and investment fee of wholesale and retail suppliers.
Last month, LNG spot import price was $134.75 per ton, up 107.7% from the same month last year, close to the level of 1,138.14 won in January of this year, a record high.
In addition, the recent increase in the won/dollar exchange rate is also a factor in pushing up gas rates.
In the midst of this, electricity rates are expected to rise in October, so the pressure on inflation due to simultaneous increases in gas and electricity rates is expected to increase.