Nucor Rallies Against Commerce's Finding of No Benefit for Provision of Electricity in South Korea

The Commerce Department erred by finding that the South Korean government's provision of electricity for less than adequate remuneration conferred a non-measurable benefit in a countervailing duty review, U.S. steel company Nucor Corp. argued in a July 8 complaint at the Court of International Trade. During the review, Nucor took issue with the evidentiary flaws with the cost data that Commerce used, telling the agency that it was illegal to say that the data reflected market-based costs. The suit mirrors the language in a separate case brought by Nucor over a different CVD review (Nucor Corporation v. United States, CIT #22-00171).

The case contests the 2019 administrative review of the CVD order on hot-rolled steel flat products from South Korea. In the review, it was alleged that the respondents received a countervailable benefit from the provision of electricity for less than adequate remuneration. This led to the South Korean government explaining how its electricity market works.

In South Korea, KEPCO is the sole supplier of electricity, but it doesn't generate electricity itself. It buys it through the Korean Power Exchange (KPX), which is a market for electricity generated by six generators that are all owned by KEPCO subsidiaries. KPX itself is owned by KEPCO and its subsidiaries. The price of electricity, though, is set through a formula with a variable and fixed cost component along with an adjustment coefficient factor to prevent overpayment.

The South Korean government also explained that the mandatory respondent in the case paid for electricity based on electricity prices in a general tariff schedule with different rates for different demand periods. Commerce, in its preliminary determination, said that using a "tier three" benefit methodology KEPCO gave electricity to the mandatory respondents for LTAR under certain tariff classes, but the agency ultimately calculated a non-measurable benefit amount. Commerce said that, after looking at past reviews, it found that any benefit from KPX would be an upstream subsidy and that no benefit was conferred by KPX's prices since the six generation companies recovered their costs.

Taking its case to the trade court, Nucor argued against supposed evidentiary flaws in the cost data. "Since the record was closed and Commerce had decided to rely on KEPCO’s cost data as reported by the [government of South Korea], Nucor argued that this data nevertheless showed that a benefit was conferred...," the brief said. "Nucor thus argued that Commerce erred by finding that no benefit was conferred under a particular tariff class when KEPCO covered its costs inclusive of investment return on all sales to all customers in the aggregate. ... Nucor argued that basing the benefit analysis on the aggregate performance of the government supplier rather than on the prices actually paid by the respondents under review was contrary to the statute, Commerce regulations, and clearly articulated court and agency precedent."