Thursday, February 25, 2021

Texas State’s 18 million won electricity bill’bomb’ could happen in Korea?


There is virtually no upper limit on electric charges…
Texas state has strong tendency to avoid regulations… power generation infrastructure is also underdeveloped
“Difficult to happen in Korea”

In San Antonio, Texas, USA, which was hit by the worst cold wave, a long line of cars from residents stands in front of a food bank operated in a’drive through’ method on the 19th. AP Yonhap News

In the midst of a strong winter cold, some residents of Texas in the United States have a lot of glances tilting their heads at the news that they have received a bill of “bomb” that costs 18 million won for electricity.

This was basically caused by an imbalance in power supply and demand. The price of electricity bills surged when demand exceeded the supply of electricity as power plants in Texas stopped operating due to a cold wave.

However, such an accident is difficult to happen in other states or in Korea. This is because the side is largely due to the unusual electricity tariff system in Texas.

Texas privatizes extreme electricity markets

According to foreign media and industry sources on the 22nd, some Texas residents’ electricity bills this month have jumped more than 20 times than the previous month. Fox News said, “A resident of Arlington, Texas, paid an average of 660 dollars (730,000 won) per month, and received a bill of 17,000 dollars (18.81 million won) this month.” I suffered such damage,” he said.

Texas is one of the most extreme privatization of electricity markets in the United States. It is a structure in which the price of wholesale electricity purchased by private power supply companies is reflected in the electricity bill of consumers in real time. Usually, the government sets a’cap’ to prevent rapid rate volatility, but it’s okay to say that Texas doesn’t have this.

“The Texas state government has allowed up to $9,000 per megawatt (mWh) of electricity price fluctuations that are reflected in real time,” said Yeon-je Jeong, head of the Energy Economics Research Institute’s electricity policy research team. It is rare in other states as well as in other states in the United States.”

Visuals_The opening of the electricity market by states

This has nothing to do with the Texas government’s reluctance to regulate everything. Texas is the only region that does not connect power grids, such as transmission and distribution, with other states in the United States to circumvent federal regulations. It solves power through self-generation using nuclear and wind power in the region.

“Texas is a region with a strong separatist tendency to become independent from the US Federation since the time of the Civil War,” said Seok Kwang-hoon, an expert member of the Energy Conversion Forum.

In this way, the expansion of power generation infrastructure in preparation for emergencies has been pushed to the rear as the power market is completely entrusted to private companies and regulations are minimized. It is reported that power plants in Texas do not even have a freeze-stop insulation facility. An official in the domestic industry said, “There has never been such a cold wave in Texas in the past 90 years,” and said, “Unless there is a public corporation like KEPCO in Korea, which private company will invest money in it?”

On the 17th of this month, a couple is leaving the house with their belongings near Glenwood in Huto, Texas. They said they would leave home and go to a nearby hotel to escape from the cold due to the subsequent power outage. AP Newsis

Difficult to occur in the Korean electricity tariff system

Of course, there is also a side where consumers in Texas usually benefit from the largely variable rate system following privatization of the electricity market. The average electricity bill per ㎿h in Texas is usually only 50 dollars (55,000 won). In Korea, the rate for an ordinary family house is around 8,300 won.

However, while Korea implements the progressive system, the unit price of electricity per kilowatt (kW) supplied by a public corporation (KEPCO) is fixed at a’constant’, so electricity rates do not fluctuate even in a disaster situation. In addition, KEPCO’s electricity rate adjustment must go through a deliberation by the government and cannot be increased at will.

Some are concerned that the Texas state situation could be reproduced in Korea as the’fuel cost indexing system’ was introduced, in which electricity rates fluctuate according to international oil prices from the 11th of last month. Regarding this, an official from KEPCO said, “Even if oil prices surge, the upper limit of electricity bills that can be raised per quarter is 3 won per kw. I said.

Hyunwoo Kim reporter




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