ELECTRICITY BILLS EXPECTED TO RISE

[Anchor Lead]

The Korea Electric Power Corporation's deficit is predicted to hit an all-time high of over 30 trillion won this year. In light of this, the government is considering raising electricity fees next year as well.

[Pkg]

KEPCO's accrued deficit as of the third quarter of this year reached 21.8 trillion won. It will likely grow further in the fourth quarter when demand for heating rises. If the trend continues, the corporation's deficit this year will likely surpass 30 trillion won, recording an all-time high. That's the reason why the government is considering raising electricity fees again next year. An energy ministry official said the hike would be inevitable given the soaring energy prices and KEPCO's deficit. The official added the ministry is currently working out details. Electricity fees consist of basic fees, basic fuel prices and fuel cost adjustment fees. The government is considering raising basic fuel prices first. They are decided based on fuel prices of the past year. This year, LNG prices have doubled on-year, while prices of bituminous coal have nearly tripled. With fuel costs skyrocketing, raising basic fuel prices next year is going to be inevitable. Basic fuel prices were raised by 4.9 won in April and again by the same amount in October this year following a 9.8 won per kWh hike in late 2021. The government is scheduled to outline details next month. It will likely announce an increase in fuel cost adjustment fees as well in addition to basic fuel prices.

[Soundbite] Lee Chang-yang(Minister of Trade, Industry and Energy (Nov. 11)) : "We have yet to see how international fuel prices will change next year, but the situation is unlikely to get better suddenly. At this stage I believe electricity fees will have to be raised next year."

The government is also reportedly considering imposing a temporary ceiling on system marginal prices, which KEPCO pays to buy electricity from power generating companies.