Industrial electricity rates in South Korea's southern regions, including Honam and Yeongnam, will fall by as much as 10% under a new pricing system, with discounts growing wider the farther a region sits from the greater Seoul area.
The Ministry of Climate, Energy and Environment and KEPCO (015760) unveiled the design for the industrial regional electricity rate system at a public hearing held on the 26th at KEPCO's South Seoul headquarters in Yeongdeungpo, Seoul. Industrial rates have been identical nationwide regardless of location. Under the new plan, regions closer to power generation sites will pay less.
The country will be divided into four broad zones, each with different industrial rates. In the southern zone covering Honam and Yeongnam, rates will drop by 13 to 18 won. The average industrial selling price was 181.9 won per kilowatt-hour last year, putting the reduction at 7% to 10%.
Rates in the central zone of Chungcheong and Gangwon will fall by 10 to 15 won, or 5% to 8%, and in the northern part of the greater Seoul area by 6 to 10 won, or 3% to 8%. For the southern part of the greater Seoul area, the regional adjustment was set at zero to a 1 won cut, leaving industrial rates virtually unchanged.
Rates may also differ within a single zone depending on administrative district. Districts will be sorted into four tiers using a regional preference index under development by the Ministry of the Interior and Safety, along with designations such as industrial crisis regions. The climate ministry said the country will be divided into 11 regions in total for the purpose of differentiated industrial rates.
The government estimates the system will reduce industrial electricity costs by about 2.8 trillion won ($2.0 billion) a year. Some have raised concerns, however, that lower industrial rates will add to KEPCO's financial strain.
Major business and industry groups, including the Korea Chamber of Commerce and Industry, the Federation of Korean Industries and the Korea International Trade Association, all welcomed the plan. They said regional pricing and the broader move toward lower rates would ease costs, spur investment and support balanced regional development.
