Nucor Rails Against Finding That Provision of Electricity in Korea Conferred Non-Measurable Benefit
The Commerce Department failed to support its finding that the provision of electricity for less than adequate remuneration conferred a non-measurable benefit in a countervailing duty proceeding involving goods from South Korea, CVD petitioner Nucor Corp. argued in a Feb. 3 complaint at the Court of International Trade. Nucor also railed against Commerce's decision not to conduct verification of the South Korean government's questionnaire responses (Nucor Corp. v. U.S., CIT #23-00003).
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The case concerns the 2020 administrative review of the countervailing duty order on carbon and alloy steel cut-to-length plate from South Korea. During the review, Nucor requested that Commerce carry out a verification of respondent POSCO and the South Korean government. In its response, the South Korean government explained how the Korean electricity market worked.
In South Korea, the Korean Electric Power Corporation (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, but the price of the electricity is set through a formula with a variable and fixed cost component along with an adjustment coefficient factor to prevent overpayment. POSCO pays for electricity based on prices set by this system which has a tariff schedule with different marks for on-peak, mid-peak and off-peak periods.
While the Korean government noted various price elements set by a Cost Evaluation Committee within KPX, the government did not hand over the committee's cost assignments for the review period or information over any changes to these assignments, Nucor said. The Korean government also did not submit information the "source data and documents from the generators on which the CEC's assignments were based." In the review, Commerce preliminarily found that KEPCO supplied electricity to POSCO for LTAR at certain tariff classes, but ultimately this provision conferred a non-measurable benefit to the respondent.
Commerce then carried out in-person verification of POSCO's facilities in Seoul and Incheon, though the South Korean government was not included in the verification. Nucor argued against Commerce's decisions that the provision of electricity for LTAR confers a non-measurable benefit and to not verify the South Korean government's questionnaire responses.
"First, Nucor noted the evidentiary flaws with the cost data on which Commerce relied and argued that it was improper to presume that the data reflected market-based costs," the brief said. "... Nucor argued that the tier three standard for electricity programs as articulated by Commerce is that a benefit is conferred 'if the tariff charged to the respondent does not cover "cost of production" plus a "profitable return on investment"....' ... Nucor argued that the statute and Commerce’s rules likewise require the benefit determination to be based on the prices actually paid by the respondents, and that Commerce erred by finding that no benefit was conferred under a particular tariff class because KEPCO covered its costs inclusive of investment return on all sales to all customers in the aggregate."