hankyoreh

By Hwangbo Yon, staff reporter

Some of the country’s leading businesses have been caught stealing cheap electricity.

The list of companies secretly using cheap industrial electricity to power research facilities, offices, and golf courses includes some of South Korea’s largest corporations, among them Samsung Electronics and LG Display.

Coming at a time when the business community has been vocally opposing an electricity rate hike, calling the current industrial electricity levels “too expensive,” the findings offer proof of just how inexpensive it actually is.

According to data supplied to the Hankyoreh and Justice Party lawmaker Kim Je-nam on Oct. 22 by the Korea Electric Power Corporation (KEPCO), a total of 93,091 violations of electricity usage restrictions were found between 2004 and August 2013, with penalties amounting to 157.1 billion won (US$148.5 million).

The penalties amounted to twice the difference from the illicit use of industrial electricity.

The number of cases of improper use jumped from 8,467 (3,261 million/US$3.08 million in penalties) in 2004 all the way to 14,874 (43,021 million/US$40.7 million) in 2010. A total of 12,113 cases were found in 2011 and 11,188 the following year.

Analysts reported that the violations occurred because of differences in electricity rates for different usages. For last year, sales prices were 123.7 won (US$0.117) per kilowatt-hour at residential rates and 112.5 won (US$0.106) at regular rates. Rates for education (108.8 won/US$0.103), industry (92.8 won/US$0.088), and agriculture (42.9 won/US$0.041) were comparatively cheaper.

Over the same period, a total of 2,493 cases were found of industrial electricity being used by facilities that should have paid regular rates, with penalties amounting to 34.6 billion won (US$32.7 million).

In most cases, it was large companies that were caught trying to scrimp on electricity costs.

Industrial electricity is marked for use at production facilities for manufacturing and mining. As recently as 2004, the number of cases of illicit use stood at just 200. By 2011, there were 457 violations. Two hundred eight were found through August of this year.

The Samsung Group had the most violations among major corporations, with six affiliates caught in the act. Samsung Electronics and Samsung SDI respectively paid 27 billion won (US$25.5 million) and 1.1 billion won (US$1.04 million) in penalties for using industrial electricity at their R&D facilities. Samsung Total, Cheil Industries, Samsung Electro-mechanics, and Samsung Heavy Industries were also caught using industrial electricity at facilities marked for regular rates.

In many cases, companies were found using cheaper industrial electricity even after moving their manufacturing facilities away, or tapping into it for offices built on factory sites.

LG Display paid 31.99 million won (US$30,200) in penalties for industrial electricity used at its employee dormitory. CJ Construction was caught using it to water a golf course in Yeoju, Gyeonggi Province.

Names appearing on the list of companies using industrial electricity for their distribution facilities, golf courses, and parts warehouses included Kia Motor (8.1 million won/US$7,700 in penalties), Shinsegae Engineering and Construction (1.85 million won/US$1,750), Interpark (45.56 million won/US$43,100), E-Land World (54.9 million won/US$51,900), and S&T Daewoo (3.98 million won/US$3,800).

Public corporations were also among those penalized. Korail paid 181.95 million won (US$172,000) in penalties for industrial electricity use at its office facilities in Daejeon Station.

“Large corporations like Samsung are already benefiting immensely from industrial electricity sold at less than production cost,” said lawmaker Kim Je-nam. “Now they’re making off with tens of billions of won more by breaking the rules and using industrial electricity where they should be paying regular rates.”

“Our power authorities need to be taking more stringent punitive action,” she added.

Setting more realistic rates has been a topic of continuous discussion among power authorities and energy experts. In particular, they have said the industrial electricity rate of 61.8 won (US$0.058) per kilowatt-hour for the “light-load period” from 11 pm to 9 am is too low relative to the production cost.

Violations of agricultural and educational electricity usage restrictions have also been a frequent occurrence.

The Korea Agro-Fisheries Trade Corporation paid more than 1.5 billion won (US$1.4 million) in penalties alone for agricultural electricity used at its rice import warehouse. Regulations require the use of regular-rate electricity for imported rice storage, since it is not a domestically produced farm product.

The Air Force Academy in Cheongwon, North Chungcheong Province, was found hooking a golf course up to educational electricity supplies.

In other cases, universities were found using educational electricity supplies rather than regular ones for on-campus business facilities. In at least one instance, a local office of education was found not paying the proper rate after moving into an elementary school facility.

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