[2020 National Audit] "No Government Support for Disposal Costs of Wolsong Unit 1 Closure" VS "Aligned with Power Fund Purpose"

Controversy Over Power Fund Support for Early Shutdown of Hanwool Nuclear's Wolsong Unit 1
Opposition: "Support from Fund, Not Government Pocket Money, Is Unfair"
Government: "Support for Projects Aligned with Fund's Purpose"

[Asia Economy Reporter Moon Chaeseok] "Korea Hydro & Nuclear Power (KHNP) itself shut down the plant because it was not economically viable. It made the decision to close Wolseong Unit 1 early. Therefore, the government should not cover the sunk costs. The fund that the government intends to use for the sunk costs is the Electricity Industry Infrastructure Fund. It is the people's hard-earned tax money. The people's tax money is not the petty cash of the minister, the president, or the KHNP president." (Kim Jeongjae, People Power Party lawmaker)

"The energy transition policy is a policy promoted by the government for the sustainable development of our power industry. According to this policy decision, KHNP made the decision (to close Wolseong Unit 1 early). The government is supposed to take lawful and legitimate measures and provide support for this decision, so the government will continue to support KHNP. Since it aligns with the purpose of power industry development, I believe the electricity fund can also be used for support." (Sung Yunmo, Minister of Trade, Industry and Energy)

"KHNP itself closed the nuclear plant citing lack of economic viability" ... "Decision also considered acceptability and safety"

The opposition party strongly criticized the government's support policy for KHNP's early closure of Wolseong Unit 1. The government emphasized that there is no problem because it is lawful support in accordance with the purpose of the electricity fund. The electricity fund is known to be a quasi-tax fund, collected by deducting 3.7% from electricity bills.

On the 7th, lawmaker Kim claimed at the Ministry of Trade, Industry and Energy's audit held by the National Assembly's Industry, Trade, Small and Medium Enterprises Committee that KHNP made the decision to close Wolseong Unit 1 early due to economic reasons.

Lawmaker Kim asked Minister Sung, "Is it true that the early closure of Wolseong Unit 1 was a measure KHNP took on its own because it was not economically viable?" Minister Sung replied, "It was a conclusion made comprehensively considering economic viability, acceptability, and safety."

Lawmaker Kim summoned KHNP President Jeong Jaehoon and questioned whether there was any government coercion or pressure in making the decision. President Jeong answered, "No. There was no obstruction."

There was also controversy over the appropriateness of the Ministry of Trade, Industry and Energy supporting KHNP's early closure costs of Wolseong Unit 1 through the electricity fund.

Lawmaker Kim asked, "How much is the estimated cost KHNP will claim from the government?" President Jeong replied, "Nothing has been concretely confirmed yet." Lawmaker Kim said, "The media reports it as 'KRW 1.4455 trillion + α'."

Earlier, on July 2, the Ministry of Trade, Industry and Energy announced a legislative notice for a partial amendment to the Enforcement Decree of the Electricity Business Act, which includes the basis for cost compensation for electricity business operators such as KHNP.

"Government should not support nuclear phase-out with electricity fund as 'petty cash'" ... "Support projects aligned with electricity fund's purpose"

[Image source=Yonhap News]

The amendment established a regulatory basis allowing the use of the electricity fund to compensate costs incurred by electricity business operators during the implementation of energy policies deliberated and resolved at the Cabinet meeting, such as the early closure of Wolseong Unit 1 and the cancellation of new nuclear power plant construction plans, if recognized by the Minister of Trade, Industry and Energy.

The phrase "sustainable development and foundation establishment of the power industry," which is the purpose of collecting the electricity fund, is ambiguous, leading to the label "a fund collected from the public but used at the government's discretion anytime."

The Moon Jae-in administration consistently stated that the fund's purpose of "power industry development" does not contradict compensation for nuclear and coal phase-out, support for new and renewable energy, and the establishment of Korea Electric Power Corporation (KEPCO) University.

Lawmaker Kim raised his voice, saying, "I believe the fund should not be used for the sunk costs of Wolseong Unit 1's early closure, which KHNP judged as economically unviable," and emphasized, "The people's tax money is not the petty cash of the minister, the president, or the KHNP president."

In response, Minister Sung said, "The energy transition policy is a policy we are promoting for the sustainable development of the power industry, and according to this policy decision, KHNP made the decision (to close Wolseong Unit 1 early). The government is supposed to take lawful and legitimate measures and provide support for this decision, so the government will continue to support it. Since (the closure of Wolseong Unit 1) aligns with the purpose of power industry development, I believe the electricity fund can also be used for support." ★

Lawmaker Kim asked, "Will the government also cover the sunk costs for small and medium enterprises and workers affected after the nuclear plant closure?"

Minister Sung replied, "We intend to support the costs lawfully and legitimately incurred by the business operator. How it relates to other operators is something the cost estimation committee can decide later," he said.

This content was produced with the assistance of AI translation services.