February 1, 2023
SEOUL – Many South Koreans were deeply shocked to see their heating bills for December as a result of gas price hikes and more cold waves this winter. The so-called “heating bill bomb,” however, is not the last one. The heating bills for January will be equally, if not more, painful for most households.
Worse still, other utility rates, led by electricity, are scheduled to be raised, putting more burdensome pressure on households and companies at a time when the country is still mired in an economic slowdown initiated by the pandemic.
The Korean government is trying to help alleviate the impact of record-high energy prices with hastily arranged measures for vulnerable groups, but concerns are mounting as to whether they will be sufficient to enable those struggling at the margins to get through the harsh winter.
International prices of liquefied natural gas price began to increase from March 2021 and Russia’s invasion of Ukraine in February 2022 sent it soaring. After freezing the rate for about two years, the Korean government finally raised the gas price here four times last year, pushing it up by 38.4 percent from a year earlier.
But the heating bills people got this month showed a much higher increase, reaching 50 percent in many cases, due to the colder weather that forced people to keep the heating on far longer than the previous year.
As complaints about higher heating bills popped up on online communities and public opinion about the energy price policy worsened, the rival political parties started a blame game, bickering over the cause and possible countermeasures.
Unsurprisingly, the dispute took a toll on President Yoon Suk Yeol’s popularity. According to a survey released by Realmeter on Monday, Yoon’s approval rating inched down 1.7 percentage points to 37 percent last week. This was the third straight week the rating had declined, and Realmeter said the drop was attributable to a surge in heating bills.
Apparently mindful of the political risk, Yoon on Monday freed up 100 billion won ($81.2 million) in reserve government funds for emergency use in supporting vulnerable groups with surging heating bills, a fairly swift move that was taken only hours after the item passed a Cabinet meeting.
With the reserve funds and an existing 80 billion won budget, the Yoon administration plans to spend a total of 180 billion won to double the value of energy vouchers, targeting 1.18 million vulnerable households.
The ruling People Power Party said Tuesday that Yoon had ordered officials to find ways to help middle class households with high heating bills, saying that the party will explore new support measures for them.
The main opposition Democratic Party of Korea is intensifying its salvo against the Yoon administration in connection with the spike in heating bills. Last week, Democratic Party Chair Lee Jae-myung proposed offering 7.2 trillion won in handouts aimed at helping people to pay for surging heating and energy bills. Lee also demanded the government impose a “windfall tax” on energy firms to redistribute extra profits and secure funds for the proposed handouts.
On Tuesday, the Democratic Party repeated what Lee called for, threatening to push for the legislation linked to the windfall tax unless the government takes action.
While the political parties are eager to pass the blame on each other, Korean households are set to be hit by a mix of high utility bills in the coming months. The electricity rate, for instance, was raised by 13.1 won per kWh in the first quarter of this year, up 9.5 percent from the previous quarter.
Public transport fares are also on the rise. Starting from Wednesday, the basic taxi fare in Seoul is 4,800 won, marking a hike of 1,000 won. And the Seoul Metropolitan Government is considering hikes in subway and bus fares in April.
Given that the heating bill shock might depress consumption in a way that worsens the economic recovery, the government has to come up with more support measures and keep utility bills from spiraling out of control.