Electricity rates will be raised by 4.5 percent on average starting Monday, with prices of high-voltage power for industrial use going up by 6.6 percent, to induce a reduction in power consumption, the Ministry of Knowledge Economy said Friday.

High-voltage, industrial power consumers account for 51.5 percent of the nation’s electricity consumption, followed by households (14.6 percent).

Electricity rates for housing and farming will remain unchanged, while the rates for four other categories ― industrial, general, educational use and street lamps ― will be moved up by between 3.9 percent and 6.6 percent.

It is the first time the government has raised electricity prices twice in a year in 30 years. It last did in 1981 when Korea was in the aftermath of a global oil shock. Electricity rates were raised by an average of 4.9 percent in August.

Korea’s electricity consumption soared 30.6 percent in the five years to last year, in stark contrast to Japan (1.9 percent), Britain (5.1 percent), France (5.6 percent) and the United States (1.7 percent), according to the ministry.

“Low electricity prices have resulted in a growing preference for electric power over fossil fuels, distorting the energy market,” the ministry said in a press release.

“Use of electricity for heating rose sharply since 2009 due to unusually low temperatures in the winter.”

The ministry also cited the increase in power generating fuels such as liquefied natural gas, coal and gasoline as reasons for the rate hikes.

Starting Monday, prices will rise by 3.9 percent for low-voltage power for general and industrial use, 5 percent for high-voltage general use, 4.5 percent for schools and libraries, and 6.5 percent for street lamps.

Friday’s announcement came two weeks after the Korea Electric Power Corp. called for the need for an average increase in the 10-percent-range in a closed board meeting.

KEPCO has suffered from chronic deficits and some 33.4 trillion won in debts, with last year’s operating loss amounting to 1.8 trillion won.

Major companies such as Samsung Electronics, POSCO and Hyundai Steel will have to pay tens of billions of won more in electricity costs annually. Samsung Electronics paid some 2.17 trillion won in electricity costs last year, according to data released by Democratic Party’s Rep. Noh Young-min.

Application of higher rates for peak hours ― between 10 a.m. and 12 p.m., 5 p.m. and 8 p.m., 10 p.m. and 11 p.m. ― will be expanded to some 111,000 homes and businesses that consume 300 kilowatts or more. So far, only 13,000 entities consuming 1,000 kilowatts or more were charged higher rates for peak hours.

Consumers of more than 300 kilowatts for farming or educational purposes, however, will be exempted from the peak hour system until next year after a survey, the ministry said.

The government said it will make it mandatory for companies and buildings that consume more than 1,000 kilowatts to cut their peak-hour consumption by at least 10 percent from a year ago, and prohibit turning on neon signs between 5 and 7 p.m.

It plans to cut Saturday peak-time rates by 30 percent for companies that move their operation hours to Saturday.

By Kim So-hyun (sophie@heraldcorp.com)