“How much was your management fee? Ours was over 500,000 won.”
“Ours was 650,000 won.”
“It's 540,000 won for a 25-pyeong.”
Households that received the January management fee bill sent to their homes are in uproar over the 'heating cost bomb.' Worries about excessively high January management fees are piling up in local online cafes and apartment communities. “It’s a management fee bill with numbers I’ve never seen before in my life,” they say, already worrying about the February management fee bill they will receive in March.
The sharp rise in January management fees is attributed to the increase in district heating fees and gas prices implemented last July, which led to higher heating costs in January as the severe cold snap hit. As the issue of management fee hikes has flared up since the beginning of the year, resistance against the proposed increase in household electricity rates being reviewed within the government is also expected to intensify.
◇ District heating fees have risen more than 60% in less than 3 years
The surge in heating costs is directly reflected in price statistics.
According to the Korean Statistical Information Service on the 27th, the price index for district heating fees last month was recorded at 162.99 (2020=100). This indicates that current district heating fees have risen by 62.99% compared to the reference year of 2020. Considering that the actual increase began in mid-2022, it means they have risen by over 60% in just two and a half years.
In January, the price index for city gas was 145.63, and the price index for electricity was 142.78. Both public utility rates have increased by about 45% compared to five years ago. Particularly, from 2020 during the COVID-19 pandemic to the first half of 2022, there was a period of restraint in public utility rate increases, taking into account the household burden. It has taken less than three years for heating costs to rise by over 60% and gas and electricity rates to increase by over 40%.
During the same period, the inflation rate for personal services was 18.7%, and the increase for industrial products was 15.2%. This illustrates that the rising rate of public utility charges was relatively high. Items showing this level of price increase are limited to those like apples and pears, which faced supply shortages due to drastic declines in production caused by climate change.
◇ Due to the management fee bomb, electricity rate hikes may lose momentum
As reactions to the management fee bomb have made living costs burdensome since the beginning of the year, the government's consideration of public utility rate increases is expected to face difficulty in advancing for the time being.
Currently, the Ministry of Trade, Industry and Energy uses the term 'normalization' and expresses the need for electricity rate increases. It argues that an increase in electricity rates is inevitable to resolve the cumulative deficit issue of the Korea Electric Power Corporation and to secure funding for the maintenance and repair of power facilities.
In this regard, Minister of Trade, Industry and Energy Ahn Duk-geun noted during a meeting with industrial reporters at the beginning of the year, “It is difficult to specify a timeline, but the need to normalize energy prices remains unchanged.” He added, “If we distort the rates too much, it will place a significant burden on future generations, so we will strive to normalize them to avoid passing this issue onto generations to come.”
The Ministry of Trade, Industry and Energy holds the stance that, following the price increases for industrial electricity last year, increases are also necessary for residential and general electricity rates.
However, price authorities are keeping their distance from increases in public utility rates such as electricity. A Ministry of Strategy and Finance official stated, “The Ministry of Trade, Industry and Energy has not officially reported the necessity of an increase in electricity rates yet,” and emphasized, “Currently, we have no ongoing reviews regarding the increase in electricity rates or other public utility charges.”
In government circles, there are many predictions that the ruling party will not push for politically burdensome increases in public utility rates as the Constitutional Court is conducting an impeachment trial against President Yoon Suk-yeol, and potential political schedules, such as presidential elections, may be added depending on the court's decision.
A government official stated, “We are aware that household management fee burdens have increased since the beginning of the year and are monitoring the situation,” adding, “It is necessary to review measures to lessen the burden of management fees or to expand support for vulnerable groups. Given the current timing, it is likely to be difficult to pursue increases in public utility rates for the time being.”