The South Korean government has formally opposed legislative efforts by both ruling and opposition parties to cut electricity rates for key industries such as steel and petrochemicals. The government argues that granting rate benefits to specific industries would undermine fairness in the current electricity pricing system and shift the burden onto the public.
According to the National Assembly on the 2nd, the Ministry of Climate, Energy and Environment submitted an opinion to parliament stating it finds five proposed amendments to the Electricity Business Act "difficult to accept." The bills were introduced separately by Rep. Min Byoung-dug, Rep. Eo Ki-goo and Rep. Jung Jin-wook of the Democratic Party of Korea, and Rep. Kim Jung-jae and Rep. Lee Sang-hwi of the People Power Party. The amendments would reduce electricity rates or waive Electric Power Industry Fund levies for steel and petrochemical companies in regions designated as industrial crisis areas.
The ministry warned that applying rate cuts to the steel sector would prompt similar demands from other energy-intensive industries, making disputes over fairness unavoidable. It also cited the risk of trade friction. Given past cases in which low electricity rates for South Korea's steel industry were deemed subsidies abroad and led to countervailing duties, the ministry concluded that rate support could trigger trade disputes.
The financial strain on electricity retailers including KEPCO was also flagged as a concern. Mandating rate cuts by law would limit flexibility in managing tariffs and could invite lawsuits over deteriorating profitability, the government said. The Electric Power Industry Fund also has little room for expanded exemptions, as spending has risen with increased investment in renewable energy and power grids. Fund expenditures grew to 3.0857 trillion won this year from 2.1145 trillion won in 2024, while statutory levies, its main revenue source, fell to 2.6161 trillion won from 3.0757 trillion won over the same period.
The ministry proposed regional industrial electricity tariffs and fiscal support as alternatives. Industry officials counter that current levels of support are insufficient to restore competitiveness amid oversupply and aggressive low-price competition from China.
