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Korea vs. the World: Is It Really That Bad?
[ Issue 148 Page 9 ] Sunday, November 27, 2016, 03:30:41 Chanyoung Ryu Staff Reporter chandescartes@kaist.ac.kr

     This summer in Korea has been heated due to both record-high temperatures and conflict over the largely controversial electricity fees. The public has united with many parts of the media to criticize the ineffective system and to demand an improved and more balanced way to reach a reasonable goal of electricity consumption reduction. On the other hand, government officials have been as persistent as their opposing side in resisting an amendment in the matter. While both sides agree that cutting power consumption is a worthy goal, they disagree as to whether the current system will help in doing so. The public’s argument largely boils down to two aspects of the system: first, the increase in payment is ridiculously high, and second, the high taxes on households are unfair as commercial and industrial sectors pay less taxes even though they occupy a higher relative proportion of energy consumption. But are these complaints really justified? What is a reasonable measure of judgment? The answer to this question may lie in the electricity billing systems of other countries.

     Residential electricity fees in Korea are unique in their progressively increasing manner; that is, the more power one uses, the more one will have to pay for each kilowatt-hour (kWh). However, it is not the accumulation itself that makes the country an exceptional case. Rather, it is the degree to which it accumulates. Fees are divided into six discrete sections, with the first section covering the first 100 kWh, each proceeding section covering the next 100 kWh, and the last covering from 500 kWh onward. The difference between the first and last sections is a total of 11.7 times, as the price is 60.7 KRW per kWh in the first section and 709.5 KRW for the last one.

     No other country shows such rampant differences. Among the Organization for Economic Cooperation and Development (OECD) countries, which include the United States and most countries in the European Union, most do not have progressive rates when it comes to electricity fees. The United States, one of the countries that does have progressive rates, has three stages and the difference between the highest and lowest stages is a mere 1.6 times. Japan and Canada both show a maximum difference of 1.5 times, and countries like France and Germany lack a progressive rate at all. Outside of the OECD, Taiwan’s system entertains five stages, which seems comparable to Korea, except that the difference here is only 2.4 times. Examining the actual prices further shows the magnitude of Korean electricity fees. At their lowest stages, the United States charges 113.6 KRW per kWh and Japan charges 192.8 KRW per kWh; at the highest, they charge 124.9 KRW per kWh and 259.6 KRW per kWh, respectively. Although at the lowest stage, Korea may have the cheapest electricity cost, this figure is meaningless as it is very difficult to spend within the first few stages. In fact, it is estimated that the average per capita electricity consumption of Korean households is 1240 kWh (2011).

     An examination of Korea’s electricity consumption by sector further raises doubts on the policy’s equity. Largely, there are three major consumers of electricity: residential, commercial, and industrial. (Transportation, while a major consumer of other types of energy, does not come into consideration regarding electricity.) If the residential sector were to use more electricity than other sectors, high taxes on households would be justified, since it could help in reducing overall electricity consumption. However, according to the Korea Electric Power Corporation (KEPCO), in 2015, households were responsible for a mere 15 percent, while commercial was for 25 percent and industrial for a soaring 54 percent. Furthermore, the Korean industrial sector spends 1.3 times more than the OECD industrial sector average while the Korean residential sector (1240 kWh) spends half the OECD residential sector average (2448 kWh). If anything, progressive electricity fees on the industrial sector rather than the residential sector would contribute greater results in cutting down on the country’s energy usage. In the midst of all these statistics and figures, it is unsurprising that Korean citizens would accuse the current policy of going needlessly tough on the little guy while lacking the courage to address the main troublemaker at hand.

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