KEPCO Reports Operating Loss of 32.6 Trillion KRW Last Year... 'Worst Performance Ever'

[Asia Economy Sejong=Reporter Dongwoo Lee] Korea Electric Power Corporation (KEPCO) recorded a historic deficit exceeding 32 trillion won last year. This was the result of delayed tariff normalization amid a sharp rise in international energy prices.

On the 24th, KEPCO announced that its annual sales last year reached 71.2719 trillion won, a 17.5% increase compared to the previous year. However, operating losses during the same period surged by 457.7% to 32.6034 trillion won. The deficit size last year soared to more than six times that of the previous year (2021). Although sales increased due to electricity sales volume and tariff adjustments, operating expenses rose by 37.35 trillion won due to soaring fuel prices.

In the electricity sales revenue sector, sales volume increased by 2.7% due to a rise in the average operating rate of the manufacturing industry (74.4% → 75.3%), and sales unit price rose due to tariff adjustments, increasing revenue by 8.8904 trillion won. The problem is that fuel costs and power purchase costs also increased by 15.1761 trillion won and 20.2981 trillion won, respectively. As electricity demand increased, power generation rose, and fuel prices such as liquefied natural gas (LNG) and coal surged, causing the System Marginal Price (SMP) in the electricity market to more than double.

In fact, the government raised electricity rates by a total of 19.3 won per kWh (kilowatt-hour) in three rounds last year, but the deficit continued to expand. This is because the sharp rise in fuel costs was not fully reflected in electricity rates, solidifying a structure where "the more electricity is sold, the greater the deficit." According to the Monthly Electricity Statistics Report, KEPCO purchased electricity from power plants at an average of 155.5 won per kWh last year but sold it at 120.5 won per kWh, incurring a loss of 35 won per kWh.

KEPCO stated, "We will make every effort to overcome the financial crisis caused by the global surge in fuel prices and to achieve early management normalization, including resolving accumulated deficits." It added, "Through close consultation with the government, we will promote electricity rate adjustments and related system improvements based on the principle of cost-reflective pricing while considering the burden on the public, and prepare measures to support rational energy consumption."

[Image source=Yonhap News]

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