The six lines of an electricity bill — read one by one, from the top

The bill has arrived. Your eyes go straight to the total at the bottom. "A bit more than last month." Then you close it.

The unfamiliar names written above it — basic charge, energy charge, climate and environment charge, fuel cost adjustment charge, Electric Power Industry Basis Fund, value-added tax — usually go unread. But read these six lines apart just once, and when the news reports an "electricity rate hike," you will see right away which line of your bill it is about. Today, with the bill in hand, let's read it one line at a time, from the top.

How do the six lines group together?

The six lines split into "four lines that are added up" and "two lines put on top." The basic charge, the energy charge, the climate and environment chargeClimate and environment charge The climate and environment charge is the line on a Korean power bill that shows policy costs such as renewable deployment and emissions reduction. Glossary →, and the fuel cost adjustment chargeFuel Cost Adjustment Charge A bill item that passes changes in generation fuel prices through to electricity bills. Each month it adds usage multiplied by the fuel cost adjustment rate. Glossary → add up to the electricity charge. Charge the Electric Power Industry Basis Fund levy and value-added tax separately on that one total, add them, and you get the amount billed.²Source 2Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge)See in sources →2 Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge)⁴Source 4KEPCO (Korea Electric Power Corporation), *Basic Supply Terms and Conditions* (「기본공급약관」, unofficial translation) Art. 67 (bill calculation: (1) components, (2) item 2 climate and environment charge· Annex 7, item 3 fuel cost adjustment· Annex 8 guidelines)· Art. 82 (separate billing of the fund)See in sources →4 KEPCO (Korea Electric Power Corporation), *Basic Supply Terms and Conditions* (「기본공급약관」, unofficial translation) Art. 67 (bill calculation: (1) components, (2) item 2 climate and environment charge· Annex 7, item 3 fuel cost adjustment· Annex 8 guidelines)· Art. 82 (separate billing of the fund)

Think of a food delivery app receipt. The prices of the dishes are added up into a total, and a delivery fee goes on top of that total. The bill's four lines are the dishes; the two lines are the delivery fee. There is one difference. A delivery fee is a fixed amount, but the bill's two lines are charged by multiplying the total by a rate.

Which lines grow the more you use?

Of the four lines, all except the basic charge are "amount used × unit price." The energy charge, the climate and environment charge, and the fuel cost adjustment charge each multiply that month's electricity use (kWh, the unit in the bill's usage box) by a price per kWh (the unit price). Use more, and these three lines all get bigger together. In a quarter when the fuel cost adjustment rate is negative, the amount taken off gets bigger.

The energy charge for electricity used at home has one more device: the progressive tariffProgressive tariff A progressive tariff charges a higher unit price for the extra electricity used as consumption rises. Glossary →. Once use passes a set block, the part above it is charged a higher unit price. It is like a staircase where each step costs more the higher you climb.

This staircase is lower than it used to be. From December 2016, its 6 steps were cut to 3, and the most expensive step's unit price went from 11.7 times the cheapest step's to 3 times (these are the figures from that reform. In today's rate table it is about 2.6 times, worked out in "How the electricity bill climbs its steps"). Since 2019, in the hot months of July and August only, the first step is widened up to 300 kWh and the second up to 450 kWh. A home that uses 300 kWh a month stays inside the cheapest first step for those two summer months.³Source 3Ministry of Trade, Industry and Energy (산업통상자원부), press briefing (13 Dec 2016)· press release (1 Jul 2019)See in sources →3 Ministry of Trade, Industry and Energy (산업통상자원부), press briefing (13 Dec 2016)· press release (1 Jul 2019)

How much do the two lines on top add?

Let's follow it with numbers. Say the four lines add up to an electricity charge of exactly 50,000 won (won is the Korean currency; this is an assumption, just to explain).

• Electric Power Industry Basis Fund: 2.7% of 50,000 won → 1,350 won
• Value-added tax: 10% of 50,000 won → 5,000 won
• Amount billed: 50,000 + 1,350 + 5,000 → about 56,350 won

The fund is just what its name says: money collected to strengthen the foundations of the power industry. It has been 2.7% since July 2025. Each of the two is charged separately on the electricity charge, the sum of the four lines. A real bill may differ by a few tens of won because of rounding.⁴Source 4KEPCO (Korea Electric Power Corporation), *Basic Supply Terms and Conditions* (「기본공급약관」, unofficial translation) Art. 67 (bill calculation: (1) components, (2) item 2 climate and environment charge· Annex 7, item 3 fuel cost adjustment· Annex 8 guidelines)· Art. 82 (separate billing of the fund)See in sources →4 KEPCO (Korea Electric Power Corporation), *Basic Supply Terms and Conditions* (「기본공급약관」, unofficial translation) Art. 67 (bill calculation: (1) components, (2) item 2 climate and environment charge· Annex 7, item 3 fuel cost adjustment· Annex 8 guidelines)· Art. 82 (separate billing of the fund)²Source 2Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge)See in sources →2 Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge) To try it with your own home's usage, enter it in the electricity bill calculator.

Why is there a separate fuel cost adjustment charge?

The fuel cost adjustment charge is like the fuel surcharge on a plane ticket. It is listed apart from the fare and goes up and down from time to time with oil prices. Electricity works the same way: this line separately reflects how much the price of the fuel that power plants burn has gone up or down.

If the fuel cost actually incurred (over three months, from four months to two months before the month the rate applies) is higher than a fuel cost fixed in advance (the base fuel cost), an amount is added on this line; if it is lower, an amount is taken off. It is reset every three months (sometimes the value stays the same; this can happen when the rate hits its upper or lower limit, or when the government holds the change back).

This line and the climate and environment charge started showing up separately on the bill in January 2021.¹Source 1Ministry of Trade, Industry and Energy (산업통상자원부), press reference material *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, 17 Dec 2020, unofficial translation)See in sources →1 Ministry of Trade, Industry and Energy (산업통상자원부), press reference material *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, 17 Dec 2020, unofficial translation)

How much could this line be for your home? Its unit price is held so it cannot go beyond 5 won per kWh up or 5 won down. By the government's own reckoning when it created this line, for a home that uses 350 kWh a month, this line adds or takes off at most 1,750 won a month (350 kWh × 5 won).⁵Source 5Ministry of Trade, Industry and Energy (MOTIE), *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, press reference material, 2020-12-17; unofficial translation).See in sources →5 Ministry of Trade, Industry and Energy (MOTIE), *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, press reference material, 2020-12-17; unofficial translation). However much fuel prices swing, this line's unit price stays within 5 won up or down. When that limit kicks in, and when the government can put it on hold, are set by a separate formula and rules. That formula and the government's hold are followed in "Who sets electricity prices, and how?"

There is a common misunderstanding. Because of the name, people assume it moves together with the power market's wholesale price, the SMPSMP (System Marginal Price) SMP is the energy price set for each trading hour in the power market. It is the highest generation price among the generators eligible to set the price in that hour. Glossary →. They are different values. The SMP is the wholesale price power plants receive in the market; the fuel cost adjustment charge is one line of the retail bill we pay.

Who sets the rates?

KEPCO (Korea Electric Power Corporation) writes a document setting out the terms on which it sells electricity (the Basic Supply Terms and Conditions), and it needs the minister's permission — "approval" — for it.²Source 2Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge)See in sources →2 Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge) That is why KEPCO cannot raise or cut rates on its own, and why every rate story comes with the word "approval." The framework of government approval of rates has been in place since the end of 1981, when the Electric Utility Act was amended.⁶Source 6Electric Utility Act (전기사업법) (Act No. 3500, 31 Dec 1981), text of the enactment and amendmentrates to be approved by the President after deliberation by the State Council (국무회의).See in sources →6 Electric Utility Act (전기사업법) (Act No. 3500, 31 Dec 1981), text of the enactment and amendment — rates to be approved by the President after deliberation by the State Council (국무회의).

Here you can see the thread behind "KEPCO deficit" news. KEPCO buys electricity in the market at prices based on the SMP. But its selling price is set by approval. If the buying price rises and the selling price cannot follow, that gap becomes a deficit.

Which line is a "rate hike" story about?

On December 30, 2022, the day before the last day of the year, KEPCO issued an announcement. Starting New Year's Day, electricity rates would go up by 13.1 won per kWh. But open the announcement and this number is not the value of one line. The energy charge rose by 11.4 won and the climate and environment charge by 1.7 won, and together they made 13.1 won. For vulnerable households, part of that year's increase was held back.⁷Source 7KEPCO (Korea Electric Power Corporation), press release (보도자료, 30 Dec 2022, unofficial translation)energy charge up 11.4 won/kWh, climate and environment charge up 1.7 won/kWh (from 1 Jan 2023).See in sources →7 KEPCO (Korea Electric Power Corporation), press release (보도자료, 30 Dec 2022, unofficial translation) — energy charge up 11.4 won/kWh, climate and environment charge up 1.7 won/kWh (from 1 Jan 2023).

Five months later, on May 16, 2023, rates rose again. This time it was 8.0 won per kWh, on one line: the energy charge.⁸Source 8KEPCO (Korea Electric Power Corporation), press release (보도자료, 15 May 2023, unofficial translation)energy charge up 8.0 won/kWh (from 16 May 2023).See in sources →8 KEPCO (Korea Electric Power Corporation), press release (보도자료, 15 May 2023, unofficial translation) — energy charge up 8.0 won/kWh (from 16 May 2023). Under the same words "electricity rate hike," once two lines moved and once one line moved.

What does it come to for your home? For a home that uses 300 kWh a month, January's 13.1 won adds about 3,930 won a month to the four-line total (13.1 won × 300 kWh). The fund and value-added tax are then charged on top of that as rates. This estimate adds only the unit price and leaves the progressive steps and the basic charge as they are.

So when you see a story that says "electricity rates up ○ won per kWh," first ask which line's unit price that "electricity rate" is. The energy charge unit price? The fuel cost adjustment unit price? The climate and environment charge? The fuel cost adjustment unit price can change every three months. The basic charge, the energy charge, and the climate and environment charge change when KEPCO changes the rates in its terms and gets the minister's approval. This piece calls that a "rate adjustment." The fund and value-added tax are charged as rates on the total, so they change when the four lines change. The fund's rate itself is written in the Enforcement Decree, so it changes only when the decree is amended.²Source 2Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge)See in sources →2 Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge)

What to watch for when using these numbers

If you handle bill numbers in a report or an article, keep three points in mind.

• The fund and value-added tax are charged on the electricity charge, the sum of the four lines. Value-added tax is not put on top of the fund again.
• The 50,000 won in the sum above is an assumption, just to explain. A real bill may differ by a few tens of won because of rounding.
• When an "electricity rate hike" takes effect depends on which line it is about. The fuel cost adjustment unit price can change every three months; the basic charge, the energy charge, and the climate and environment charge change at a rate adjustment (approval of the terms). The fund and value-added tax are rates, so they follow the four lines.

When you open your next bill

Start at the total at the bottom and move your eyes up one line at a time. Four lines were added up, and two were charged separately on that total and added. If the total went up from last month, first tell two things apart: did you use more, or did a unit price change? (In July–August, also check whether the wider summer steps applied.)

Once you can read the six lines apart, you can see which line of your bill a rate story is about.

The biggest of them is usually the energy charge. Even its cheapest step is 120 won per kWh, an order of magnitude above the fuel cost adjustment rate, which moves within 5 won either way. When use goes up, this line does not just grow; it climbs steps. The shape of those steps is counted out in "How the electricity bill climbs its steps."

Words in this piece

• climate and environment chargeClimate and environment charge The climate and environment charge is the line on a Korean power bill that shows policy costs such as renewable deployment and emissions reduction. Glossary → — a bill line that separately shows the climate and environmental costs KEPCO paid for the renewable supply obligation, emissions trading, cutting back coal power and the household power-saving cashback.
• fuel cost adjustment chargeFuel Cost Adjustment Charge A bill item that passes changes in generation fuel prices through to electricity bills. Each month it adds usage multiplied by the fuel cost adjustment rate. Glossary → — a line that reflects ups and downs in power plant fuel prices in the bill every three months. Its unit price cannot go beyond 5 won per kWh up or down.
• progressive tariffProgressive tariff A progressive tariff charges a higher unit price for the extra electricity used as consumption rises. Glossary → — a residential pricing method where the price of each step rises as use passes each block.
• kWhkW and kWh A kW (kilowatt) is a unit of power: how hard electricity is made or used at a moment. A kWh (kilowatt-hour) is a unit of energy: how much is made or used over time. Glossary → — the unit that measures how much electricity was used. Usage on the bill is written in this unit.
• Electric Power Industry Basis Fund — a fund collected by adding 2.7% to the electricity charge and used to strengthen the foundations of the power industry.
• SMPSMP (System Marginal Price) SMP is the energy price set for each trading hour in the power market. It is the highest generation price among the generators eligible to set the price in that hour. Glossary → — the hourly wholesale price power plants receive in the power market. It is a different value from the charges on your bill.

¹Source 1Ministry of Trade, Industry and Energy (산업통상자원부), press reference material *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, 17 Dec 2020, unofficial translation)See in sources →1 Ministry of Trade, Industry and Energy (산업통상자원부), press reference material *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, 17 Dec 2020, unofficial translation): Ministry of Trade, Industry and Energy (산업통상자원부), press reference material *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, 17 Dec 2020, unofficial translation) https://www.motir.go.kr/kor/article/ATCL3f49a5a8c/163646/view ²Source 2Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge)See in sources →2 Electric Utility Act (전기사업법) [Act No. 9680] Art. 16,20090521)· Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge): Electric Utility Act (전기사업법) [Act No. 9680] Art. 16 https://www.law.go.kr/법령/전기사업법/(09680,20090521) · Electric Utility Act (전기사업법) Art. 51(1) and Enforcement Decree Art. 36 (Electric Power Industry Basis Fund levy, 27/1,000 of the electricity charge) https://www.law.go.kr/법령/전기사업법/제51조 ³Source 3Ministry of Trade, Industry and Energy (산업통상자원부), press briefing (13 Dec 2016)· press release (1 Jul 2019)See in sources →3 Ministry of Trade, Industry and Energy (산업통상자원부), press briefing (13 Dec 2016)· press release (1 Jul 2019): Ministry of Trade, Industry and Energy (산업통상자원부), press briefing (13 Dec 2016) https://www.motir.go.kr/kor/article/ATCL3f49a5a8c/158887/view · press release (1 Jul 2019) https://www.motir.go.kr/kor/article/ATCL3f49a5a8c/161850/view ⁴Source 4KEPCO (Korea Electric Power Corporation), *Basic Supply Terms and Conditions* (「기본공급약관」, unofficial translation) Art. 67 (bill calculation: (1) components, (2) item 2 climate and environment charge· Annex 7, item 3 fuel cost adjustment· Annex 8 guidelines)· Art. 82 (separate billing of the fund)See in sources →4 KEPCO (Korea Electric Power Corporation), *Basic Supply Terms and Conditions* (「기본공급약관」, unofficial translation) Art. 67 (bill calculation: (1) components, (2) item 2 climate and environment charge· Annex 7, item 3 fuel cost adjustment· Annex 8 guidelines)· Art. 82 (separate billing of the fund): KEPCO (Korea Electric Power Corporation), *Basic Supply Terms and Conditions* (「기본공급약관」, unofficial translation) Art. 67 (bill calculation: (1) components, (2) item 2 climate and environment charge · Annex 7, item 3 fuel cost adjustment · Annex 8 guidelines) · Art. 82 (separate billing of the fund) https://cyber.kepco.co.kr/ckepco/front/jsp/CY/D/C/CYDCHP00108.jsp ⁵Source 5Ministry of Trade, Industry and Energy (MOTIE), *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, press reference material, 2020-12-17; unofficial translation).See in sources →5 Ministry of Trade, Industry and Energy (MOTIE), *Rational electricity rate system reform, including cost-linked tariffs, finalized* (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, press reference material, 2020-12-17; unofficial translation).: Ministry of Trade, Industry and Energy (MOTIE), ^*1More precisely *1Rational electricity rate system reform, including cost-linked tariffs, finalized**1 Rational electricity rate system reform, including cost-linked tariffs, finalized*(https://www.motir.go.kr/kor/article/ATCL3f49a5a8c/163646/view) (「원가연계형 요금제 등 합리적 전기요금 체계개편안 확정」, press reference material, 2020-12-17; unofficial translation). ⁶Source 6Electric Utility Act (전기사업법) (Act No. 3500, 31 Dec 1981), text of the enactment and amendmentrates to be approved by the President after deliberation by the State Council (국무회의).See in sources →6 Electric Utility Act (전기사업법) (Act No. 3500, 31 Dec 1981), text of the enactment and amendment — rates to be approved by the President after deliberation by the State Council (국무회의).: Electric Utility Act (전기사업법) (Act No. 3500, 31 Dec 1981), text of the enactment and amendment — rates to be approved by the President after deliberation by the State Council (국무회의). ⁷Source 7KEPCO (Korea Electric Power Corporation), press release (보도자료, 30 Dec 2022, unofficial translation)energy charge up 11.4 won/kWh, climate and environment charge up 1.7 won/kWh (from 1 Jan 2023).See in sources →7 KEPCO (Korea Electric Power Corporation), press release (보도자료, 30 Dec 2022, unofficial translation) — energy charge up 11.4 won/kWh, climate and environment charge up 1.7 won/kWh (from 1 Jan 2023).: KEPCO (Korea Electric Power Corporation), press release (보도자료, 30 Dec 2022, unofficial translation) — energy charge up 11.4 won/kWh, climate and environment charge up 1.7 won/kWh (from 1 Jan 2023). ⁸Source 8KEPCO (Korea Electric Power Corporation), press release (보도자료, 15 May 2023, unofficial translation)energy charge up 8.0 won/kWh (from 16 May 2023).See in sources →8 KEPCO (Korea Electric Power Corporation), press release (보도자료, 15 May 2023, unofficial translation) — energy charge up 8.0 won/kWh (from 16 May 2023).: KEPCO (Korea Electric Power Corporation), press release (보도자료, 15 May 2023, unofficial translation) — energy charge up 8.0 won/kWh (from 16 May 2023).