Seoul Energy Corporation launches emergency management amid gas price surge
Seoul Energy Corporation has initiated company-wide emergency management measures in response to a significant surge in city gas prices.
Our take
Will lagged oil-linked gas prices keep costs high for Korea's gas-fired heat and CHP this winter?
Korean gas-fired heat and CHP on oil-linked city gas tariffs enter winter at high fuel cost, because contract oil prices reach the tariff with a four-to-five-month lag and the oil fall has not arrived.
Only about 50-60% of the final tariff is oil-linked, and the article gives no date for the oil fall to reach it. The winter cost increase depends on whether that happens before or during the November-to-March peak.
For investors — Investors in gas-fired heat and CHP should model fuel cost on the contract lag and the seasonal load profile rather than on spot oil, since an oil decline improves margins only months later.
Demand response and VPP operators should treat this operator's review of heat demand management modelled on power demand response as an early signal, since no design or payment has been published.
Watch: Seoul Energy Corporation's announcement of emergency management measures.
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