Regional Industrial Electricity Rates Implemented for First Time in 4 Years... Concerns Over Insufficient Reductions

The implementation of the regional industrial electricity rate system is imminent. This system, which applies rates differently based on transmission costs and power self-sufficiency, is being introduced four years after the special bill was proposed. While it has been a long-standing goal for local industries, there are concerns that the actual rate reductions may fall short of expectations.

Under the 'Special Act on the Promotion of Distributed Energy,' a legal basis has been established to set electricity rates differently by region, taking into account transmission and distribution costs and power self-sufficiency. The government plans to finalize a measure that divides the country into four zones to apply differential rates. Gyeongnam, which has a power self-sufficiency rate of 137%—ranking 6th highest among 17 metropolitan cities and provinces—is expected to benefit from rate reductions if grouped into the 'Southern Zone' along with Jeonnam and Gyeongbuk.

The industrial sector had initially demanded reductions of 20 to 30%, but the government's proposal under review is reportedly expected to result in a maximum reduction of only around 10%. Lee Seung-hwan, manager of the Survey and Public Relations Team at the Changwon Chamber of Commerce and Industry, pointed out that tangible incentives through larger reductions that companies can actually feel are necessary to produce practical effects, such as preventing corporate relocation and expanding investment.

The government plans to hold a public hearing soon to announce the specific zoning and the magnitude of the rate differentials.