[Anchor]

Starting ahead, industrial electricity rates for factories will vary depending on the region. The move is aimed at dispersing electricity demand concentrated in the greater Seoul area, but concerns are also being raised.

Reporter Choi Seung-hun explains how the rates will change.

[Reporter]

Currently, industrial electricity rates are the same whether a factory is located in Seoul or in local provinces.

However, because about 40% of the electricity consumed in the greater Seoul area is brought in from non-capital regions, transmission costs increase accordingly, leading to significant regional conflicts.

To address this, the government has introduced a solution: offering discounts on electricity rates for consumption in areas that produce large amounts of electricity.

First, the country is divided into four zones: southern and northern greater Seoul, the central region, and the southern region.

While rates will remain nearly unchanged for the Gangnam area in Seoul and southern Gyeonggi Province, rates in northern Seoul, northern Gyeonggi Province, and Incheon will become 6 won to 10 won cheaper per kilowatt-hour.

Rates in Gangwon and Chungcheong will drop by 10 won to 15 won, and those in Gyeongsang and Jeolla will fall by 13 won to 18 won, representing a decrease of up to 10% compared to the current rates.

Industries that consume large amounts of electricity in the southern region, such as steel in Pohang and Gwangyang, petrochemicals in Yeosu and Ulsan, and semiconductor complexes slated for Honam, are expected to benefit.

The specific discount rates will be determined after dividing the four major regions into 11 sub-regions.

Key criteria include how much transmission networks are utilized, how much electricity is self-produced locally, and the degree of need for balanced regional development.

Depending on the industry and scale, it is expected that electricity bills could be reduced by up to tens of billons of won annually.

The government stated that the differentiated pricing system will contribute to balanced national development and strengthen industrial competitiveness, but voices of concern were also raised at a public hearing today (August 26).

Critics point out that the government and KEPCO will have to shoulder a burden close to 3 trillion won annually due to the rate cuts, and that price distortion could worsen because factors other than supply costs are involved.

[Interview / Lee Yu-su / Professor of Economics, Soongsil University: National balanced development was taken into consideration. But if discounts are being massively provided in non-capital regions by factoring this in, prices will be significantly distorted...]

There were also opinions that the decentralization effect might not be significant because corporate location decisions take into account various conditions such as infrastructure besides electricity bills, and that lower rates could reduce the use of eco-friendly renewable energy.

The government plans to finalize detailed regional rates by reflecting the opinions gathered at the public hearing and implement the system within this year.

(Photo: Yonhap News / Video by Choi Ho-jun, Video Editing by Kim Jong-tae, Design by Kim Ye-ji)