Gas Price Spike Raises Power Costs for Industry
Energy-intensive businesses should expect higher fuel-linked electricity costs as LNG and coal prices climb through winter.
Updated on Nov. 2, 2026 in Oil and Gas
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European natural gas prices rose above 100 euros per MWh for the first time since December 2022, with the Dutch TTF futures closing at 103.94 euros per MWh on October 30. The spike follows repeated disruption of LNG shipments through the Strait of Hormuz, squeezing South Korea's state utility KEPCO and the power costs of industrial users.
Why it matters
Competition between Europe and Asia for limited LNG supplies ahead of winter has compounded the shipping disruption, pushing up fuel costs for power generation. Because high industrial electricity rates already push businesses toward self-generation, KEPCO faces both higher procurement costs and shrinking demand for its power.
Dutch gas futures closed at 103.94 euros per MWh and JKM LNG reached $32.84 per MMBtu, with power-generation LNG costs up 34.6% year-on-year in September. KEPCO's procurement costs rose 17.6% in August while its average sales price fell 1.2%, leaving the utility squeezed between costs and revenue.
The players
KEPCO (Korea Electric Power Corporation)
South Korea's state-owned utility that buys fuel and generates and distributes most of the country's electricity, with its earnings constrained by government-set retail rates.
The details
Shipments of liquefied natural gas have been repeatedly disrupted through the Strait of Hormuz by the Middle East war, cutting the supply available to buyers. Europe and Asia are now bidding against each other for the remaining cargoes, which lifts prices across both markets. Coal has moved in the same direction, with Australian thermal coal up roughly 30% from pre-war levels to $150.45 per ton. For a utility that buys fuel and sells electricity at regulated rates, rising input costs without matching price increases widen the gap.
Timeline
2022: KEPCO recorded a deficit of nearly 33 trillion Korean won during the Russia-Ukraine war.
April: The government lowered daytime electricity rates for large businesses.
August: KEPCO's power procurement cost rose 17.6% year-on-year.
October 30: Dutch TTF gas closed above 100 euros per MWh.
2026 to 2030: KEPCO plans 55.3 trillion Korean won in grid investment.
Market Landscape
KEPCO's record 2022 deficit of nearly 33 trillion Korean won came from a similar fuel-price squeeze during the Russia-Ukraine war. The current spike again pits European and Asian buyers against each other for LNG, while KEPCO's debt has reached 210.7 trillion won.
Businesses with high electricity consumption should expect pressure on industrial power rates and should factor fuel-linked cost increases into near-term budgets. Operators in energy-intensive sectors may find self-generation economics shifting as grid power becomes more expensive.
The takeaway
Energy-intensive operators should track monthly LNG and coal price benchmarks against their own power contracts to size exposure before winter. Reviewing how any retail or industrial tariff adjusts to fuel-cost changes is a practical step for finance teams to take now.
Further reading
For broader context on how supply shocks move fuel prices, explore our coverage of Oil and Gas.
Source note: This article includes information reported by 조선일보.
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