Kepco tries tough tactic to increase power rates
¼ö¾÷ÀÏ : 2011-11-23

Kepco tries tough tactic to increase power rates

ÇÑÀü '¿ä±Ý Àλó' ¼±°ø¿¡ Á¤ºÎ, ´çȲÇÑ ±â»ö ¿ª·Â

Nov 22,2011
 
   
The Korea Electric Power Corp. is playing hardball by pushing to increase electricity rates to offset its chronic deficit and to stabilize energy usage in a bid to prevent another power outage, the company said yesterday.

Kepco’s board of directors voted in favor of a 10 percent price hike on Nov. 17 in a meeting led by outside directors, according to the company. A total of 15 directors, including eight outside directors, attended the meeting. Kepco CEO Kim Joong-kyum was also present.

In the past, Kepco unofficially recommended price adjustments to the Ministry of Knowledge Economy, which would again discuss the issue with the Ministry of Strategy and Finance. If the government decided to increase the electricity rate, the Kepco board would put the issue to a vote. This time, however, the procedure was reversed. It remains to be seen whether the government will agree to an increase in electricity rates.

According to the plan, rates for households and farmers will stay the same while those for large companies will be raised significantly.

The Ministry of Knowledge Economy said, however, it has yet to receive any official request from Kepco, the country’s sole electric power provider, but said it will review the issue when such a demand is filed.

According to the Ministry of Knowledge Economy, Kepco’s move is attributed to a lawsuit filed by minority shareholders against former Kepco CEO Kim Ssang-su for damage caused by the company’s indecision to raise electricity rates.

In August, a group of 13 Kepco shareholders claimed that Kim’s failure to raise prices led to 2.8 trillion won ($2.5 billion) in damage to the company over the past three years.

Currently, Kepco’s rates represent only about 97 percent of production costs.

The government has long discouraged public corporations from raising its prices to protect Korea’s industrial sector, the backbone of the country’s exports, and most recently to prevent increases in such prices from adding inflationary pressure.

“Kepco seems to have considered the lawsuit for making such a decision without consulting the government, unlike in the past,” said Kim Jung-gwan, vice minister of knowledge economy.


By Limb Jae-un [jbiz91@joongang.co.kr]

 
 

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