South Korean Energy Prices On The Up

Posted on 29. Jun, 2009 by Ross in Asia, Energy Prices

South Korean energy prices are beginning an upwards trend as the state’s two utilities struggle to balance their books.

Whilst households have to deal with only a 5.1% price rise (with a 20% discount for families with three or more children in order to encourage childbirth), the competitiveness of Korean industries will suffer under a 9.8% rate hike, providing strong financial incentives to invest in energy-saving technologies.

The price rise was inevitable, since the deficit of the Korea Electric Power Corporation (KEPCO) had ballooned to 2.9 trillion won ($2.2 billion). The change in consumer habits was largely to blame: the company aimed to diversify growing demand by pricing night-time electricity more cheaply. Households responded more strongly than expected, with huge shifts in demand for off-peak power leaving a massive hole in the company’s income streams.

KEPCO isn’t the only Korean struggling utility. The country’s gas supplier, Korea Gas Corporation, has 5 trillion won in uncollected charges outstanding. The two companies are expected to write off a combined loss of 1 trillion won this year, making it impossible for the Korean government to rule out further price rises.

Image by d’n'c @ Flickr