Seoul: The state-run Korea Electric Power Corp. (KEPCO) announced on Monday that it will keep electricity rates unchanged for the third quarter of the year despite indications that a rate cut could be justified, as the corporation continues to face significant financial challenges.

According to Yonhap News Agency, KEPCO revealed that the adjusted fuel cost, an essential component of the country's electricity pricing, will remain at the maximum level of 5 won per kilowatt-hour (kWh) for the period spanning July to September. This rate has been consistently maintained by the company since the third quarter of 2022.

The adjusted fuel cost is calculated before each quarter within a permissible range of plus or minus 5 won per kWh, which depends on energy prices such as coal and liquefied natural gas (LNG) over the preceding three months. KEPCO's report indicated that electricity rates, when adjusted for fuel costs, were expected to decrease by 3.4 won per kWh. However, the government has advised maintaining the existing rate, pointing to the company's challenging financial situation.

The government has urged KEPCO to implement measures aimed at improving its financial health. The company's financial difficulties began when it continued to supply electricity at prices lower than production costs, even as global energy prices surged between 2021 and 2023, largely due to Russia's invasion of Ukraine.

KEPCO is currently burdened with a debt of 206 trillion won and is incurring approximately 11.4 billion won in interest expenses each day, highlighting the urgency of addressing its financial issues.

Source: Yonhap News Agency