| 摘要 |
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1. Research Purpose
Price mechanism under perfect competition leads to the efficient allocation of resources, in which government intervention to market does not need. However, it is usual that assumptions of economic theory does not consist with the real economy. Market failure is easily found in the real economy. Energy consumption and production causes externalities like environmental pollution. Network energy industries like electricity and city gas have characteristic of monopoly market structure. Market failures such as externalities and natural monopoly often cause the inefficient allocation of resources.
To solve problems like market failures, generally, taxation or price regulation are introduced. Korean government has also imposed various kinds of taxes on most energy sources and regulated tariff rates of electricity and city gas in order to improve the efficiency of resource allocation. However, Korean government's price intervention does not seem to succeed in improving the efficiency of resource allocation, because the energy pricing policy usually focuses on macroeconomic objectives such as price stabilization and strengthening competitiveness of industries rather than efficient allocation of resources. These pricing policies distorted energy prices, which caused industry structure to be energy-intensive and resulted in the inefficient structure of energy consumption.
In this study, we assess the structure of energy prices and analyze its problems. Based upon these analyses, we propose how to improve energy pricing policy and the regulating system for the normalization of the structure of energy prices.
2. Summary
Petroleum products prices have been determined by price mechanism since 1997. Government has effect on petroleum prices through taxes and public charges. Tariff rates of network energy like electricity and city gas are determined by the government regulation. Korean government's energy pricing policy through taxation or regulation seems to have had negative effects on the efficiency of resource allocation because policy targets mainly focused on macroeconomic variables.
Energy tax system fails to reflect social costs like externalities properly. In network energy, prices do not fully reflect supply costs, which cause the distortion of energy consumption structure.
Current electric power tariffs are too low (across all customers) to cover present costs of the industry at present, distorting the resource allocations in the economy. There are a lot of cross-subsidies among customer groups, deteriorating the equity among them. These are incurred by non-economic policy objectives that are in conflict among them. City gas tariffs also have the similar problems such as relatively low level of tariffs, cross-subsidies between city gas and gas for generation.
The distorted structure of energy consumption results from these energy pricing policies. Low energy prices induce the expansion of energy intensive industries and cause industry structure to be energy intensive. Recently, the increase in energy consumption share of industrial sector and sharp increase in electricity consumption are related to low energy prices.
We estimated the inefficiency of energy consumption resulted from price distortions with Logit cost share function. According to estimation results, if electricity tariffs reflected its cost precisely, net benefits would estimate to be 135.0 billion Won in industrial sector and 116.9 billion Won in residential sector, respectively. If the proper rate of return on capital were 105%, net benefits in the industrial and residential sectors would increase to 327.7 billion Won and 350.8 billion Won, respectively.
To solve problems caused by irrational energy pricing policies, we propose solutions as follows.
First, energy tax structure should be simplified and consistent taxation standard should be set up, based upon reflecting social costs properly. Current various kinds of energy taxes should be simplified into consumption tax and environment tax. Tax rates should be readjusted to reflect the overall environmental pollution, supply risks, and international competitiveness of industry, etc.
Second, the practice of tariff setting based on supply costs should be established. Basically, network energy tariffs should reflect the states of supply-demand and the structure of supply costs. A lot of efforts are required to reduce cross-subsidies in tariffs to enhance the equity among customers and to induce fair competitions among energy resources and energy supply/demand balance. Tariffs are economic signals. They are effectively behavioural adjustment devices. Their proper design and split conveys the right signals to both consumers and the companies. Consumers need to be informed about the costs they cause in order for the companies to be able to account in the future for those costs and invest, accordingly so as to be in the position to offer the services demanded.
Major policy assignments are as follows. First of all, consider prices of petroleum products. In case of the energy for transportation, there is a need to consider the costs of traffic congestion with the environment costs. And these costs should be reestimated periodically, reflecting the state of improvement in vehicle technology and fuel quality. Considering environment and social equity, it is required to cut excessive tax rates and additional public charges on kerosene and propane as heating energy sources of low income households, while the tax rate imposed on B-C should be raised.
The main priorities for improving network energy tariffs should be placed on recovery of utilities revenue requirements and fair apportionment of costs among customers. For electricity, tariffs structure should be transformed into tariffs by voltages, the residential progressive rates should be moderated and the scheme for periodic rates adjustments according to changes in fuel prices should be introduced. The incentive regulation regime is recommended to overcome the demerits of current rate-of-return regulation regime. The flexible demand management pricing schemes such as dynamic rates and voluntary load reduction programs should be introduced for the mid/long run. Gas tariffs should also be more cost-reflective, leading to rational energy consumption.
3. Research Results and Policy Implications
When there exist market failures like externality and monopoly, government intervention into price determination can improve the efficiency of resource allocation. Major examples are imposition of tax and price regulation. New equilibrium by these methods is more similar to the equilibrium of perfect competition than one without intervention. This implies that government intervention should be done in the direction recovering the equilibrium under the perfect competition.
However, Korea's energy pricing policies have led to the degeneration rather than the improvement of efficiency. Of course, stabilizing price level and strengthening international competitiveness are important. But for these objectives, if energy prices does not reflect their supply costs, the structure of energy consumption would be distorted and have negative effects on the economy in the long run. Energy pricing policies should be reformed to be market-friendly and environmental-friendly.
Language : Korean |
