KEPCO Reports Record Q1 Operating Loss of 7.8 Trillion Won: "The More We Sell, The More We Lose"

Sales Increase by 9.1% but Operating Profit Drops by 8.3 Trillion
Coal, Gas Fuel Cost Surge Hits Hard

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Dongwoo Lee] Korea Electric Power Corporation (KEPCO) recorded a historic operating loss close to 8 trillion won in the first quarter of this year.

KEPCO announced on the 13th that its operating profit for the first quarter of this year showed a deficit of 7.7869 trillion won, a decrease of 8.3525 trillion won compared to the same period last year. The operating loss is the largest ever on a quarterly basis, increasing by nearly 2 trillion won compared to last year's deficit of 5.8601 trillion won.

During the same period, sales increased by 9.1% year-on-year to 16.4641 trillion won, but fuel costs (7.6484 trillion won) and power purchase costs (10.05827 trillion won) surged by 92.8% and 111.7%, respectively, leading to an increased deficit. KEPCO has been in the red for four consecutive quarters since turning to a deficit in the second quarter of last year.

The sharp rise in fuel prices such as liquefied natural gas (LNG) and coal contributed to the growing deficit. In the first quarter of this year, the price per ton of LNG was 1.327 million won, up 142% compared to the same period last year, and bituminous coal rose by 191%. In contrast, electricity sales revenue increased by only 7.6% to 15.3784 trillion won.

KEPCO's power purchase costs account for more than 85% of its operating expenses, and as fuel prices for LNG, coal, and others rose sharply, the cost of power purchased from power generation companies also increased.

Considering the prolonged COVID-19 pandemic and high inflation last year, electricity rates were adjusted to reflect increases in standard fuel costs and climate environment costs, but the deficit structure deepened as the increase was minimized in consideration of the public burden.

The securities industry had forecasted KEPCO to record an operating loss exceeding 17 trillion won this year, but with the first quarter deficit far exceeding expectations, some opinions suggest the loss could reach up to 30 trillion won.

KEPCO states that it has exceptionally frozen electricity rates domestically amid the global energy crisis and soaring prices, emphasizing the urgency of raising electricity rates.

A KEPCO official explained, "Looking at past cases, when international energy prices surge, KEPCO's deficit was inevitable," adding, "Currently, the more electricity we sell, the larger the deficit becomes."

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