[Insight & Opinion] "Deficit-Ridden" Public Enterprises: Raising Rates Is the Only Way to Survive

The government and ruling party have temporarily put the plan to raise electricity and gas prices on hold. The general interpretation is that this was a political decision made in consideration of the rapidly declining approval ratings of the ruling party and government, rather than concerns over unstable inflation. Although there seems to be some hope that crude oil and natural gas prices have been falling since the beginning of this year, the situation is far from easy. Both Korea Electric Power Corporation (KEPCO) and Korea Gas Corporation (KOGAS) are mired in deep deficits. In particular, KEPCO is worried not just about simple losses but about severe capital erosion.

The government and ruling party are demanding "painful restructuring" from KEPCO and KOGAS. This is a natural demand. The energy public enterprises must push through restructuring not just to the extent of "cutting" but to the level of "removing" parts. Shameful moral hazards such as overseas trips by KEPCO and its subsidiaries' executives for leisure purposes are absolutely unacceptable. Such deviations are only possible in cases where the soul is abandoned and the ruinous nuclear phase-out policy is led.

KEPCO University, where professors and students are throwing money parties supported by KEPCO, which is struggling to save every penny, must also be decisively disposed of. The training of energy specialists is not within KEPCO’s business scope as specified in the KEPCO Corporation Act. In the 21st century, where convergence and fusion are the trend, there is no realistic chance for an "energy university" to survive normally. It is also a clear fact that KEPCO University is further accelerating the extinction of regional universities.

Revolutionary reform of the Ministry of Trade, Industry and Energy, which oversees energy policy, is even more urgent. The ministry must be made to thoroughly reflect on the mistakes of actively leading the nuclear phase-out under the previous administration. The 10th Basic Plan for Electricity Supply and Demand, which ended up as more of the same, reflects the ministry’s desperate reality. There is no hope for the future in a Ministry of Trade, Industry and Energy that is still tinkering with the disclosure of gasoline and diesel costs from 10 years ago.

Our energy policy has become extremely vulnerable to international trends because of the nuclear phase-out. The opposition party cannot be free from responsibility for the nuclear phase-out. It is not the time to insist on the absurd argument that they never seriously attempted nuclear phase-out. With a mindset of grasping at straws, they must actively cooperate with the government and ruling party. All efforts should be focused on reviving the Kori Unit 2 reactor, which will be shut down starting next week. The shutdowns of Kori Units 3 and 4, Hanbit Units 1 and 2, and Wolseong Unit 2 must also be a concern. The most urgent task is to expedite the continued operation procedures that the previous administration deliberately abandoned. There is no luxury to wait leisurely for three years and six months. Of course, safety cannot be compromised. Wisdom to take detours when in a hurry is also necessary. However, the duration of administrative procedures such as document preparation, review, deliberation, and resolution must be minimized as much as possible.

The additional cost of 3 trillion won to replace the power production of the shut-down nuclear reactors is not the only problem. Serious difficulties in stable power supply may arise. Already, solar and wind power, which have exceeded 20% of total generation capacity, are making stable power supply difficult. The record-breaking heatwave this summer is also a situation that must be seriously worried about.

Of course, a price increase is very painful for the public. However, if there is a problem in the supply of electricity and gas, the pain the public must bear becomes much greater. Even if it is difficult right now, we have no choice but to endure the pain of price increases. This is a truth even a child in Samcheok would know. The flimsy hope and illusion that there might be other tricks must be firmly discarded.

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