Then-presidential candidate Yoon Suk-yeol walks to a podium for a press conference to announce his plan to scrap an electricity rate hike for April at an office in Yeouido, Jan. 13. Korea Times file

KEPCO CEO Cheong Seung-il

By Lee Kyung-min

Korea Electric Power Corp. (KEPCO) has postponed its announcement on an electricity rate hike for the second quarter, a move to conform to President-elect Yoon Suk-yeol's campaign pledge to freeze the power bills of consumers, according to market watchers Monday.

The state-run utility firm has little incentive to railroad a rate hike unilaterally at the risk of defying Yoon's transition committee, extremely mindful of public sentiment deteriorated due to surging living costs brought on by pandemic-sparked inflation.

However, the inability to broach the highly sensitive issue key to limiting crashing corporate profit will hasten the deterioration of KEPCO's financial soundness, a grim yet highly probable scenario given it registered a 5.86 trillion won ($4.8 billion) operating loss last year. Financial market consensus has it that the loss will amount to as high as 20 trillion won this year, crippled by the electricity rates freeze despite surging global oil and coal prices.

Whether the state-run entity would be cornered further to scrap an earlier agreed-upon increase of 6.9 won per kilowatt-hour, starting next month remains to be seen, given Yoon's repeated comments on how small businesses and the self-employed are taking the full brunt of the rising inflation.

Lack of agreement?

KEPCO said in a statement posted on its website late Sunday that the announcement on the electricity rate hike for the second quarter would be delayed until after a consensus is reached among policy authorities.

"Discussions are underway with relevant ministries over the fuel cost adjustment in the April-June period," it said. "We were notified that the announcement should follow the conclusion of deliberations."

The decision followed the firm's request to raise the electricity rate 3 won per kWh for the second quarter (submitted with the energy ministry). Had the request been granted, the rate would have been raised to 9.9 won starting April 1.

A rapid increase in utility bills would weigh heavily on low-income groups and small businesses, a reason why Yoon said during the campaign that factors contributing to a spike in living expenses should be met by proper policy responses.

"An electricity rate hike is an irresponsible decision that KEPCO should be held accountable for. KEPCO made immense losses due to the rapid nuclear phase-out policy," then-presidential candidate Yoon said at a Jan. 13 press conference.

"The increase in utility bills is a significant burden for small businesses and the self-employed struggling for years due to the drawn-out pandemic," he added.

Seoul National University economist Lee In-ho said the rate hike will not be a priority for the new administration.

"Public sentiment is swinging wildly, and Yoon knows it. Yoon and his advisers will be inclined to drag out the issue as long as possible, especially since voters have been increasingly feeling the pinch of record-high inflation in recent months," Lee said.

KEPCO said the rate will be set after the conclusion of ongoing deliberations. "We will announce the plan as soon as the specifics are finalized," a KEPCO official said.