South Korea's state power firm said Wednesday it would freeze electricity rates for the third quarter in a move to ease the burdens on people following two consecutive quarters of hikes.

The planned freeze came as the government jacked up electricity rates by 5.3 percent on-year for the second quarter, or by 8 won per kWh, following a 13.1 won increase per kWh in the first quarter due to high global energy costs and the mounting losses of the Korea Electric Power Corp.

KEPCO decided to fix the adjusted unit fuel cost at 5 won ($0.004) per kWh for the July-September period, unchanged from three months earlier and to freeze other parts of the rates.

Electricity rates are tallied by adding the basic fuel cost, the climate environment fee, and the fuel cost adjustment rate.

Whether to hike the utility bills has drawn attention, particularly as energy demand is expected to rise in the summer.

The recent adjustment was still not enough to fully cover a marked increase in global fuel prices last year, but the government has taken into consideration the prices being stabilized when making a decision to freeze the third-quarter rates, officials said.

Global natural gas prices tumbled to around $2 per million British thermal units recently from nearly $10 per MMBtu in 2022, according to government data.

Last year, the government was not able to raise the energy rates enough amid high inflation and growing public burdens over the COVID-19 pandemic and an economic slowdown.

The electricity rates, accordingly, have come below production costs, and KEPCO reported a record operating loss of 32.63 trillion won, more than quadruple from a year earlier.

It also logged a 6.18 trillion-won loss in the first quarter of this year.

Given the current adverse pricing structure, however, there remains the possibility of further rate hikes.

KEPCO is forecast to suffer losses of around 1 trillion won for the second quarter and calls have grown for the improvement of its financial soundness to ensure a stable supply of electricity.

In a report submitted to the National Assembly, KEPCO called for a 51.6 won rate increase this year.

In an effort to address its financial woes, the company announced a set of reform measures, such as selling property, restructuring overseas businesses and freezing workers' wages.

Last month, its chief, Cheong Seung-il, stepped down, holding himself responsible for the managerial difficulties. (Yonhap)