The Democratic Party Proposes Amendment to Korea Electric Power Corporation Act... Increases Bond Issuance Limit by 5 Times

Representative Seong Il-jong Introduces Amendment Bill to Korea Electric Power Corporation Act

[Asia Economy Sejong=Reporter Dongwoo Lee] A bill to revise the Korea Electric Power Corporation Act, raising the bond issuance limit from the current double to five times, has been submitted to the National Assembly to improve the financial structure of Korea Electric Power Corporation (KEPCO), which is recording the largest deficit in history.

On the 23rd, Seong Il-jong, a member of the People Power Party, announced that he had taken the lead in proposing the revision bill to minimize electricity rate hikes through KEPCO's financial structure improvement.

Article 16 of the current Korea Electric Power Corporation Act limits KEPCO's bond issuance to no more than twice the sum of the corporation's capital and reserves. The revision bill led by Representative Seong raises KEPCO's bond issuance limit to five times the sum of capital and reserves.

It also includes provisions allowing the Minister of Trade, Industry and Energy to approve the issuance of corporate bonds exceeding five times the limit in urgent cases to prevent defaults on power transaction payments.

KEPCO's new corporate bond issuance this year totaled 25.3266 trillion won as of the 20th of this month. This is 2.5 times the annual issuance amount last year (about 10.43 trillion won). In other words, KEPCO has already issued more than 6 trillion won in new corporate bonds this month alone. As of the end of July, KEPCO's outstanding bond balance was 52.9 trillion won.

However, some argue that adjusting the bond issuance limit is only a temporary measure, not a fundamental improvement of the financial structure. They explain that practical measures for financial structure improvement, such as normalizing electricity rates, are urgently needed.

KEPCO recorded a historic deficit of 14.3 trillion won in the first half of this year. This was due to purchasing electricity from power producers at high prices amid soaring energy costs and selling electricity at low prices, sustaining a deficit structure.

KEPCO recently submitted a proposal to the Ministry of Trade, Industry and Energy to raise the fuel cost adjustment rate, a component of electricity rates, by 50 won per kWh in the fourth quarter. This means that electricity rates need to be increased by 50 won per kWh to allow KEPCO to sell electricity without incurring losses in the fourth quarter of this year.

Representative Seong said, "Electricity rate hikes have repeatedly failed to pass due to political interests of various administrations, but eventually, it will become unavoidable," adding, "This revision bill is the best measure we can take at present." He emphasized, "However, in the long term, reasonable electricity rate adjustments and self-help measures to strengthen KEPCO's financial soundness are necessary to improve KEPCO's financial situation."

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