Necessary to reflect the cost of ecofriendly policies and fuel costs in electricity prices for the Green New Deal
The fact that the government is indifferent towards modifying the price system while pushing for the Green New Deal and energy transition is a contradiction
KEPCO was to put forward an agenda for reorganizing the electricity price system at the board meeting in August, but the situation was unfavorable due to the spread of COVID-19 and the increased volatility in oil prices. To worsen the situation, public opinion had turned against the government because of the recent real estate problems. The reorganization of the electricity billing system was definitely not a priority of government policy.
However, several experts are emphasizing the fact that for success in the New Green Deal and energy transition, on which the government is focusing, now is the chance to restructure the electricity price system, when the international oil price is at its low.
Yujin Lee, a researcher at the Green Transition Institute, recently contributed an article to our newspaper on ‘The Green New Deal and a Restructuring of the Electricity Pricing’. In this article, she said, “The Green New Deal, by which 73 trillion won is invested by 2025, is advocating a transition to eco-friendly and low-carbon economy, but its goal of reducing greenhouse gases remains unclear. Above all, it lacks policy-wise improvement measures for a transition to low-carbon economy. The government should deem the New Green Deal as a chance to complete the roadmap for restructuring the electricity pricing system, which should contain the adjustment of industrial light load rates and a system to link electricity prices and fuel costs. This was included in the national agenda. Also, the government should go through the process of obtaining consent by disclosing the fact that it costs money to reduce greenhouse gas emissions and make a transition in energy usage.”
SNU ECE Professor Seung Ill contributed an article through which he said, “The government presented a plan to create 659 thousand jobs and to establish a foundation on which Korea will lead the world after COVID-19. However, there is no comprehensive suggestion as to how to change the electricity pricing system. I am concerned whether the Green New Deal will succeed as planned. There is a need to adopt a green energy price system, thereby showing faith in the fact that green energy will be cheaper than fossil fuel electricity in the long run, although it is more expensive in the beginning.”
Professor Moon explains that there is no Green New Deal without a change in the electricity pricing.
KEPCO also views that it is necessary to reorganize the electricity rate system as soon as possible for success in the Green New Deal and energy transition.
In particular, considering the fact that the international oil price is currently at its low, it is advocating for a way to link fuel costs with electricity prices so that electricity prices fall if fuel costs fall and rise if they rise. Also, it is proposing that the costs of ecofriendly policies (costs related to RPS and emissions), which amounts to 3 trillion won, should not be reflected in a loose manner, but categorized and charged separately. Introducing seasonal and hourly rates for house electricity is also in the agenda.
The problem is that the government is not taking an active stance. This year, due to the outbreak of COVID-19, the industry has been demanding a reduction in electricity prices. Furthermore, it is not easy for the government, conscious of the Republicans due to the controversy over phasing out nuclear power, to reasonably adjust the electricity bills.
Linking the electricity price with fuel costs cannot be easily implemented, because of the high volatility of the international oil price.
Professor Moon noted, “Before the introduction of a full-fledged green energy price system, it is necessary to implement a mechanism so that the price of electricity follows the fuel costs. If this had been implemented, the plunge of the oil prices due to COVID-19 would have been reflected on electricity prices and would have lightened the burden of electricity bills this summer.”
Translated by: Jee Hyun Lee, English Editor of Department of Electrical and Computer Engineering, firstname.lastname@example.org