City gas rates will increase from October.

Based on Seoul Metropolitan Government, the average gas rate per household increases by 5,400 won per month.

The Ministry of Trade, Industry and Energy announced today (30th) that from the 1st of next month, city gas rates for civil (housing and general use) will be increased by 2.7 won per megajoule (MJ).

This is the result of reflecting the settlement unit price increase (0.4 won per MJ) and the standard raw material cost increase (2.4 won per MJ), which was confirmed by changing the natural gas supply regulations in December last year.

According to the rate increase, the housing rate will be adjusted from 16.99 won to 19.69 won per MJ, and the general (business 1) rate will be adjusted to 19.32 won per MJ.

The increase rate is 15.9% for residential use, 16.4% for general use (Business 1) applied to restaurants, cafeterias, hairdressing salons, lodging facilities, swimming pools, etc.

Based on Seoul standards, the average annual gas bill per household rises by 5,400 won per month from 33,980 won to 39,380 won per month.

The city gas fee consists of the raw material cost (standard raw material cost + settlement unit price), which is the import unit price of liquefied natural gas (LNG), the raw material 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.

The government has already decided at the end of last year to raise the settlement unit price three times this year.

Accordingly, the settlement unit price was raised from 0 won to 1.23 won in May of this year, from 1.23 won to 1.90 won in July, and will rise once more by 0.40 won from 1.90 won to 2.30 won next month.

The Ministry of Trade, Industry and Energy said, "Receivables have been on the rise since the second half of last year as gas rates have risen only slightly compared to the rising natural gas (LNG) import price. We have decided to raise the rate,” he explained.

Accounts receivable are amounts that have not been collected as charges among the natural gas imports of KOGAS. As of the second quarter of this year, receivables amounted to KRW 5.1 trillion.

The Ministry of Industry explains that, if the receivables accumulate excessively, it is difficult to procure the cost of natural gas in the winter, which can cause disruptions in supply and demand.

According to the Ministry of Trade, Industry and Energy, the spot price of natural gas (JKM) surged from $10 per mmbtu in the first quarter of last year to $47 in the third quarter of this year.

Recently, the exchange rate has also risen sharply, and the unit price of imports continues to rise.