The Ministry of Energy of South Korea has presented three different methodologies to the Parliament to set up new residential electricity tariffs, in an attempt to simplify the complex price banding system.
The pricing system, which includes six tariff bands, arouse fierce criticism in the summer 2016, when higher air conditioning consumption led to soaring residential energy bills. In a first stage, residential tariffs for the July-September 2016 period were cut by Won 420bn (US$355m). The new pricing system is expected to reduce the burden on households during peak periods.
In the three methodologies, there would be only three tariff bands, reducing price gap between residential and industrial users -households currently face higher rates in peak hours while industrial benefit from a fixed price - and between peak and off-peak hours (peak prices can be nearly 12 times higher than the lowest charges). Peak and off-peak tariffs gap would be reduce to about three-time.
A public hearing will be held at the end of November 2016 and the new tariff system is expected to be implemented retroactively from 1 December 2016.