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[이데일리 문승관 기자] On the 23rd of last month, the National Climate Environment Conference, an organization under the direct control of the President, proposed the introduction of an electricity rate system that links environmental costs and fuel cost fluctuations, such as reflecting 50% or more of environmental costs in electricity bills step by step by 2030 through the’mid- and long-term national policy proposal’. It ignited the discussion on reorganization.
The government said that the world was following the trend of declaring carbon neutrality and changing the energy paradigm in preparation for the climate crisis, and said that it would establish an eco-friendly standardization and cooperation system by expanding standard cooperation with the United States to the low-carbon and carbon-neutral fields. Following the ‘2050 Carbon Neutral Proposal’ announced by the government on the 7th, President Moon Jae-in announced the ‘2050 Carbon Neutral Vision’ through a public speech on the 10th. Accordingly, discussions on overhaul of electricity rates are expected to gain momentum.
Electricity charges recognized as public goods… Passive to reorganization
A government official said on the 13th, “We are reviewing the new electricity rate plan in a variety of ways, such as the introduction of a fuel cost linkage system that determines electricity rates according to fuel costs and the environmental charge separation imposition for the use of renewable energy.”
The government and political circles also agree with this sense of crisis, but they are passive in restructuring electricity bills. Until now, the government has recognized electricity as a tax on the provision of public goods, and has managed it as an important item in price management. In fact, the government made an implementation guideline in 2011 to introduce the fuel cost indexing system for electricity bills, but in 2014, it was disposed of because of the obstruction of the price management measures.
As the industrial structure changes from high-carbon to low-carbon and from coal to new and renewable energy, the government is first concerned about an increase in the burden on the industry and weakening of competitiveness. He said that the overall rise in inflation was a worrisome task due to the rise in utility charges such as electricity and heating costs. Although’zero carbon’ is urgent, it means that electricity bills have no choice but to take policy and political considerations. For this reason, we are worried about the specific timing of the reorganization of electricity bills.
A government official explained, “Not only responding to climate change, but also income distribution, inflation, industrial competitiveness, etc. There are various effects, so we will comprehensively review these and decide on a policy.”
Distorted electricity bills that cannot reflect external costs
Domestic electricity bills have many problems, but government intervention is one of the biggest problems causing price distortion. Since 2016, fuel prices have risen, but electricity bill consumer sales prices have fallen. Power generation costs and sales unit prices have moved in opposite directions, which is a result of policy or political influences rather than costs or supply and demand.
In some cases, electricity bills fell below 80% of the cost recovery rate. In the 15 years from 2005 to 2019, the cost recovery rate for electricity bills exceeded 100 only for four years from 2014 to 2017. In 2018, the cost recovery rate fell to 94.1% again. This means that power generation companies continued to supply electricity while losing money due to government regulations.
Park Kwang-soo, a senior research fellow at the Korea Energy Economics Institute, said, “We need to introduce a rate system that reflects power generation costs and policy costs (emissions transaction costs, RPS costs, etc.) to consumer rates, but we are neglecting them for policy and political reasons. It is necessary to properly reflect the cost of pollution and other various costs, and also prospectively reflect the costs related to nuclear power plants.”
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◇ A new rate reform plan must be prepared through the power agency
The situation is like this, but the politicians are as well as the government’s attitude to reorganize electricity bills. In a situation where there is a widespread perception of’electricity charge reorganization = rate increase’, it is possible to meet the public opinion.
A member of the ruling party of the Small and Medium Venture Business Committee of the National Assembly, the Ministry of Trade, Industry and Energy, said, “We are entering an era of de-coal and de-nuclear power that Korea has never been to. “It is difficult to accept and there are quite high walls to explain.”
He added, “Even if we try to promote the offshore wind power project, we are delayed for nearly 10 years due to the problem of residents’ acceptance,” he said. “The reorganization of electricity bills is bound to have a significant impact as a problem of public acceptance beyond resident acceptance issues.”
Experts stressed that the government and political circles should seek a social consensus on the restructuring of electricity rates by promoting the installation of a’power agency’ as well as installing a’one-stop shop’ to expand the supply of renewable energy.
Currently, when KEPCO submits the bill to the Ministry of Trade, Industry and Energy through a resolution of the board of directors, the Ministry of Industry goes through a complicated process of approving it through consultation with the relevant expert committee, consultation with the Ministry of Strategy and Finance, and deliberation by the Electricity Committee under the Ministry of Industry. For this reason, the practical role of the Electricity Commission, acting as an electricity rate regulator, is very limited.
This is the reason for the need for’governance (a state management system that exercises administrative authority to manage national affairs)’, which is deliberated and resolved by a third party that has secured independence and objectivity in determining electricity rates. In fact, in Korea, the Korea Communications Commission is conducting verification of the cost structure of operators, approval of rate adjustments, and conflict resolution.
Seung-Hoon Yoo, a professor at the Department of Energy Policy at Seoul National University of Science and Technology, said, “In the short term, we need to increase objectivity and transparency by giving the Electricity Commission the power to determine actual electricity rates and strengthening the independence of members and roles.” Like PUC) and the UK Gas and Power Market Committee (GEMA), the Electricity Committee should be expanded and reorganized into an independent energy regulation committee.”
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