S.Korea to lift electricity costs; KEPCO shares up
SEOUL, June 5 (Reuters) - South Korea will introduce a new electricity price system that moves in line with global energy feedstock prices to ease the burden of high fuel costs on state-run energy firms, Seoul's energy ministry said on Friday.
The system, to be implemented this month, will raise electricity prices for household and industrial use, the ministry said.
The ministry said in a statement that according to state-run utility Korea Electric Power Corp (KEPCO), electricity prices for household use were 95.8 percent lower than the imported raw material costs and 90.1 percent under the raw material costs for industrial activities.
Shares of state-run utility KEPCO (015760.KS) gained 4.54 percent as of 0050 GMT versus a 0.8 percent advance in the wider market .
The power monopoly has been suffering since last year with prices of imported feedstocks such as coal, liquefied natural gas (LNG) and fuel oil jumping to record highs in July.
It posted a net loss of 882.2 billion won ($665.4 million) in the three months to March, lagging far behind Reuters' forecast of a 25 billion won net profit. [ID:nSEO244687]
Raw material prices have nearly halved since their July 2008 peaks, but the won KRW= has dropped about 21 percent against the dollar since last year, still making imports expensive for KEPCO.
Adding to the power provider's burden, the government raised electricity rates by a modest 4.5 percent in November. KEPCO says it needs at least a 20 percent increase in 2009 to cover its fuel costs and recover from a loss.
(Reporting by Angela Moon; Editing by Jonathan Hopfner)
