Korea braces for electricity price hike

South Korea announced an electricity price hike of an average 4.9% starting August in a bid to reflect growing power production costs into the electricity charges.

The increase will only have a 4.9% average in a bid to minimize the financial burden for low- and mid-income earners, said the Ministry of Knowledge Economy.

The current electricity prices are just reflecting 86.1 percent of production costs need to generate power, according to the statement.

Price hikes will be applied differentially depending on the purpose of power usage. Electricity bills for household use will rise by 2 percent, while power charges for farmers will remain unchanged. Electricity fees for commercial and industrial purposes will be lifted by 4.4 percent and 6.1 percent respectively.

The increase was mainly attributable to rising energy prices and surging demand for air-cooling.

"Burden for fuel costs became much heavier amid increasing energy prices. Fuel costs account for around 50 percent of the total production costs," an official at the ministry told Xinhua.

The official said lower electricity prices have boosted excessive use of electricity during the summer season, at which the country's power consumption usually peaks.

The ministry expected the power price hikes to reduce electricity consumption by 5.1 billion kilowatt-hours annually or 1.1 percent of the total power use in the country.