Korea Electric Power Corp (KEPCO) board members have raised concerns about the South Korean government’s policy on discounts for electricity bills for socially vulnerable groups as the state utility company struggles with it 200 trillion won ($150 billion) debt.

Maeil Business Newspaper learned on Sunday that the KEPCO board held its first meeting of the year in mid-January 2024 to discuss a revision of internal regulations aimed at keeping electricity rates unchanged for 3.65 million vulnerable households.

The measure follows a meeting of government and government party a day before the KEPCO board meeting, where the government and party members reached a consensus to postpone power rate increases for vulnerable groups as part of the Lunar New Year support policy package, despite a 21.1 won per kilowatt-hour increase in residential power rates in 2023.

The decision from the government meeting is not binding, leaving KEPCO to determine whether to implement the measure or not. But the proposed measure is likely to be a burden costing a further 288.9 billion won on the state power company, which is already grappling with accumulated losses of 45 trillion won. Despite selling assets and receiving interim dividends from subsidiaries, KEPCO bore 186 billion won of this burden in 2023.

Some KEPCO board members suggested at the board meeting that the utility should not bear the entire burden of electricity bill discounts. According to the minutes obtained by Maeil Business Newspaper, one board member raised the necessity “of suggesting a system that uses the electricity fund in support of vulnerable groups to the government.”

The electricity fund is formed by the government by taking 3.7 percent from the electricity bills paid by all citizens. According to the relevant law and decree, the fund can be used for electricity demand management, universal electricity supply, and other purposes.

“Support for electricity bills for vulnerable groups is a form of welfare benefit, and leveraging the electricity fund could be a viable option depending on the fund’s financial status,” according to Park Jong-bae, professor at Konkuk University and vice president of the Korean Institute of Electrical Engineers.

By Moon Ji-woong and Chang Iou-chung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]