The government is moving forward with a plan to implement a regional differential pricing system for industrial electricity rates. Companies in the southern region, including Yeongnam and Honam, are expected to benefit from rates that are up to 18 won lower per kilowatt-hour (kWh) than current prices.
According to the energy sector on August 13, the Ministry of Climate, Energy, and Environment recently held a closed meeting with electricity-demanding businesses to present proposals for regional differential industrial electricity rates.
The government is considering a plan to categorize the country into four major regions: the southern region, central region, northern metropolitan area, and southern metropolitan area, applying different electricity rates accordingly. The southern region is projected to receive a discount of up to 18 won per kWh, while the central region, including Gangwon and Chungcheong, may see discounts of up to 15 won. The northern metropolitan area, which includes Incheon and northern Gyeonggi Province, is also expected to receive a discount of up to 10 won.
However, significant discounts are not being considered for the southern metropolitan area, where electricity demand is concentrated. This approach aims to widen the gap in electricity rates between metropolitan and non-metropolitan areas, encouraging businesses with high electricity consumption to relocate and invest in other regions.
Considering that the current average industrial electricity rate is about 182 won per kWh, companies in the southern region could see a reduction of approximately 10%. The central region could expect a reduction of around 8%, while the northern metropolitan area may see a decrease of up to 5%.
Meanwhile, the regional differential electricity pricing system is based on the 'Special Act on the Activation of Distributed Energy,' which was enacted in 2024. The current law allows for the establishment of different electricity rates based on transmission and distribution costs among regions.
* This article has been translated by AI.
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