(provided by Korea Electric Power Corporation)

KEPCO, a breakthrough to escape from a large-scale deficit … Minister of Commerce, Industry and Energy “Cost should be reflected in electricity rates”

(provided by Korea Electric Power Corporation)

Last year, about one out of two public institutions across the country recorded a loss, with Korea Electric Power Corporation making the biggest loss at 5.8 trillion won. It is much larger than Incheon International Airport Corporation (93 billion won), which is the second largest.

KEPCO’s outlook for this year is also pessimistic. According to FnGuide, a financial information company, the size of KEPCO’s loss this year expected by securities companies is 17.47 trillion won. This is three times the size of the previous year’s record-high operating loss.

As KEPCO’s financial burden grows, pressure to raise electricity rates is inevitable. In an answer to a written inquiry submitted to the National Assembly, Candidate Chang-yang Lee for Minister of Trade, Industry and Energy said, “It is the right way to set the price by reflecting the cost in the electricity rate in the mid- to long-term and reflecting the market principle. It will return to the public burden,” he said.

KEPCO buys electricity from power generation companies and sells them retail to consumers. The wholesale electricity unit price (SMP) is mainly determined by the price of liquefied natural gas (LNG), which has the most expensive power generation unit price. Last month, the wholesale electricity price increased 2.6 times compared to a year ago, reaching an all-time high. This month, as the government cuts LNG supply prices for price stability, the wholesale electricity price is expected to drop by 30% compared to the previous month. However, it is expected to rise again in the summer when electricity demand increases.

Electricity rate consists of basic rate, electricity rate (standard fuel cost), fuel cost adjustment rate, climate environment rate, etc. The Ministry of Trade, Industry and Energy and KEPCO frozen the fuel cost adjustment unit price for the second quarter, but raised the base fuel cost and climate environment rate last month. As a result, electricity rates rose by 6.9 won per kWh. Meanwhile, from this month, KEPCO amended the related rules so that if it is difficult to pay the electricity transaction price to a public power generation company, the payment can be postponed to the next one. This is to prevent the suspension of electricity trading in the event of short-term liquidity problems due to the widening of KEPCO’s deficit, but it is pointed out that this is only a workaround.

A candidate for the Minister of Commerce, Industry and Energy also said, “In order to respond to KEPCO’s deficit problem, it is necessary first of all to strengthen KEPCO’s self-rescue efforts, while the government also devises various measures such as tax support and improvement of the electricity market system.” Meanwhile, KEPCO discussed how to make self-rescue efforts for financial improvement the previous day. It is known that the company is considering selling assets to improve its own financial structure and reducing the budget. KEPCO issued more than 13 trillion won of bonds in the first four months of this year to raise funds, more than three times the number in 2020.

[고혜영 인턴기자]

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