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🇰🇷 South Korea /Energy & Infrastructure

President proposes electricity rate reform: cheaper when abundant, pricier during peak demand

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

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  • President Lee Jae-myung proposed a shift in electricity pricing to charge less when power is abundant and more during peak demand times.
  • He suggested this change could better reflect market prices and potentially be extended to household electricity rates in the future.
  • While acknowledging current inflation concerns make immediate household rate changes difficult, he indicated a need for adjustment if public finances allow, with support for low-income households considered.

President Lee Jae-myung advocated for a reform of the electricity pricing system, proposing that rates should be lower during off-peak hours when electricity is plentiful and higher during peak times when demand strains the grid. The President made these remarks on June 13 during a national fiscal strategy meeting held at the Blue House.

Lee's proposal stems from expert arguments that the current uniform electricity rates, regardless of consumption time, distort market prices. Upon hearing from Minister of Climate, Environment, and Energy Kim Sung-hwan that industrial electricity rates already incorporate time-of-use differentials, President Lee suggested that this system should eventually be expanded to residential use.

We need to change the system so that electricity is cheaper when it's abundant and more expensive during peak times when it's scarce.

— Lee Jae-myungPresident Lee Jae-myung proposing a reform of the electricity pricing system.

He further noted that a time-based differential pricing system could enhance the efficiency of heat pump systems, which are gaining attention as eco-friendly heating solutions utilizing renewable energy. However, President Lee cautioned that immediate changes to household electricity rates are challenging due to current concerns about managing inflation. "Frankly, it is difficult to discuss the reform of household electricity rates right now due to price control," he stated.

Despite the immediate limitations, Lee reiterated the necessity of adjusting household electricity rates if public finances permit and citizens' incomes are not negatively impacted. He added that if household electricity rates were to be comprehensively increased, measures such as voucher systems would need to be implemented to support low-income households. The discussion highlights a potential future direction for South Korea's energy policy, balancing economic efficiency with social equity.

Frankly, it is difficult to discuss the reform of household electricity rates right now due to price control.

— Lee Jae-myungPresident Lee Jae-myung acknowledging current economic challenges affecting potential rate changes.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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