Koreans stunned by spike in heating costs

The Korea Times

The Korea Times

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Tue, September 26, 2023 | 07:32

Companies

Koreans stunned by spike in heating costs

Posted : 2023-01-26 08:15

Updated : 2023-01-26 14:41

A utility bill encompassing gas and electricity sticks out from a mailbox at an apartment complex in Seoul, Wednesday. Yonhap

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By Lee Kyung-min

An office worker in her 30s surnamed Lee had to take a harder look at her December gas bill. It showed she was being charged almost 50 percent more than the year before.

"There are four people in my family and the rate was 550,000 won ($449), far higher than last year's which was around 350,000 won. I couldn't believe what I was seeing at first. We did not turn up the thermostat all that much ― no more than usual anyway. I thought something might have gone wrong with the meters when calculating the amount used."

She heard on the news over the past year about Russia's invasion of Ukraine pushing up global energy prices, and that some European countries were bracing for an energy crisis. But little did she know that the military conflict halfway around the world would come to bear this hard at home.

"The high gas prices are cited as the main reason why the state-run Korea Electric Power Corp. (KEPCO) and Korea Gas Corp. (KOGAS) saw continued losses. Honestly, I didn't care too much about that news until recently when it became clear to me that it affects me directly in the form of unreasonably high and unavoidable monthly bills."

An unmarried man in his 30s shared a similar experience. He was charged 130,000 won, a figure he says was "unacceptably high." He is an office worker who lives alone in a small housing unit that provides a centralized heating system.

"The bill was too high compared to the year before, since I didn't use that much heating last month," he said. "But I could die ― quite literally ― amid the brutal cold snap these past few weeks without the heating, so I'm thinking about eating less or finding other ways to cut my spending."

These are only two of the many bill-paying citizens in the country who are becoming frustrated by the spike in gas bills.

Gas meters in Seoul / Korea Times file

Data from the Ministry of Trade, Industry and Energy showed the liquefied natural gas (LNG) price last year averaged $34.24 per metric million British thermal unit (MMBtu), a widely used measure of LNG as heat content or energy value. It was over double the $15.04 in 2021.

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Korea imported $56.7 billion (70 trillion won) worth of LNG last year. The all-time-high figure since 1956 was up 84.4 percent from the year before. Gas rates soared 38.4 percent over the past year from 2021.

Further rate hikes

Deepening the concerns about soaring living costs are gradual yet certain further hikes in gas and electricity rates this year.

Last year, the government raised electricity rates by 19.3 won per kilowatt-hour (kWh) in three separate increases in April, July and October. The rates for gas were also raised by 5.47 won per megajoule in four separate hikes in April, May, July and October.

In the first quarter of this year, the electricity rate was further raised by 13.1 won per kWh, a quarterly increase the government plans to apply throughout this year.

Exhaust from heating systems is seen against the evening sky in downtown Seoul, Wednesday. The temperature dropped to an intra-day low of minus 17.3 degrees Celsius. Yonhap

About twice as many rate hikes are expected this year, as outlined earlier by the energy ministry which said in December that 2023 will see rate increases up 1.5 to 1.9 times steeper compared to 2022.

KOGAS' operating loss was around 8.8 trillion won last year, a sharp increase from 1.8 trillion won in 2021.

KEPCO is believed to have reported a 34 trillion won operating loss last year. It is expected to report an operating loss of 18 trillion won this year. The state-run energy firm plans to register an operating surplus by 2024, an objective certain to fail without significant rate hikes over the next year.

The energy costs closely tied to the everyday life of the public are showing signs of being reduced to a political blame game.

The main opposition Democratic Party of Korea said the Yoon Suk Yeol administration is at fault for the spike in energy costs.

The ruling People Power Party says the rapid hikes are the result of years of a nuclear phase-out policy under the previous Moon Jae-in administration.

Moon spearheaded the campaign demonizing the cheaper and more stable source of energy, a reason why he could not justify the energy price increases.

lkm@koreatimes.co.kr