South Korea outlines disaster response for winter; raises gasoline and energy costs

To scale back 10% of power utilization led by govertment amenities

Raises pure gasoline costs for households, industrial customers

Electrical energy charges to rise by Gained 7.4/kWh for fourth quarter

South Korea will undertake disaster response measures to sort out the approaching winter, together with curbs on power demand, elevating gasoline costs for metropolis gasoline and energy sectors, securing LNG provide and boosting funds of power importers, based on statements made on Sept. 29 and Sept. 30.

The measures are just like contingency plans laid out by the likes of Japan and China, in addition to Europe, the place file excessive gasoline costs have drained money reserves of gasoline and energy firms and compelled governments to intervene with bailouts and worth caps.

“With home power provide extremely depending on imports and power costs quickly rising, Korea is affected by a commerce deficit regardless of strong exports,” the Ministry of Commerce, Business and Vitality stated in assertion Sept. 29. “Furthermore, as gasoline prices will not be integrated into worth hikes in time, the losses of public power firms have gotten extra extreme.”

It stated the federal government is making preparations for winter whereas searching for to scale back home power consumption and increase secure sources of power provide.

“Winter season power provide can be secured early on, and the federal government, public power firms and personal firms can be becoming a member of efforts for power provide administration by way of a joint emergency response system,” MOTIE stated.

“The purpose for the approaching winter is to scale back power utilization by 10%, led by authorities and public establishments putting caps on heating temperatures,” it stated. All central and provincial public entities can be required to save lots of power by limiting indoor heating of buildings and switching off exterior lighting.

The ministry stated a extra basic intention is to progressively increase power costs and enhance public firms’ funds. It requested firms to observe power utilization and decide to saving power in preparation for winter, “as this disaster is anticipated to persist for a substantial size of time” and “a worth adjustment is inevitable, beginning with large-capacity customers.”

Increased gasoline costs

The federal government will increase pure gasoline costs for households and industrial customers from Oct. 1 resulting from LNG import prices, MOTIE stated Sept. 30.

Pure gasoline costs for households will climb by Gained 2.7/MJ (0.19 cents/MJ), or 15.9%, to Gained 19.69/MJ from Oct. 1. Pure gasoline costs for industrial use will rise by Gained 2.72/MJ, or 16.4%-17.4%, to Gained 18.32-19.32/MJ.

It marks the fourth improve in pure gasoline charges this yr following a 7.0%-7.7% improve from July 1, a 1.8% rise from April 1 and an 8.4%-9.4% achieve from Could 1, which got here after the nation had frozen or lowered gasoline charges for 3 years.

Platts JKM LNG climbed to a median of $47/MMBtu within the third quarter, from $10/MMBtu within the first quarter of final yr and $24/MMBtu in July 2020, based on the ministry.

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The hike in gasoline costs can be inevitable because of the snowballing unpaid payments of state-run Korea Gasoline Corp, which may disrupt the nation’s LNG imports, it stated.

Unpaid payments check with losses from failing to boost home costs to replicate LNG imports by Kogas. Unpaid payments of Kogas jumped to Gained 4.5 trillion ($3.1 billion) as of end-March, from Gained 1.8 trillion three months earlier resulting from sharp will increase in import prices, based on the state utility.

Increased energy costs

Individually, South Korea’s state-run energy utility KEPCO revised electrical energy tariffs to replicate adjusted gasoline prices of Gained 4.9/KWh and a further tariff of Gained 2.5/KWh efficient in October, it stated in an announcement Sept. 30. This implies electrical energy charges rise by Gained 7.4/kWh for the fourth quarter.

“We’ve got determined to extend the electrical energy tariff to replicate increased world power costs and energy era prices,” the KEPCO assertion stated.

The nation’s retail electrical energy worth consists of a fundamental tariff and gasoline price, local weather atmosphere price, in addition to an adjusted unit gasoline price. The Korean authorities launched the adjusted gasoline price part in 2021 to alleviate any losses which may be incurred by KEPCO in periods of excessive LNG costs.

Electrical energy charges for industrial use would additional rise by Gained 11.9/kWh to Gained 16.6//kWh from Oct. 1. It marks the third hike within the nation’s electrical energy tariffs this yr following a Gained 5/kWh improve for the third quarter and a Gained 6.9/kWh rise for the second quarter.

Therefore South Korea’s retail electrical energy and gasoline payments are more likely to rise this winter amid file excessive LNG import prices, trade sources stated.