Jeong Seung-il, KEPCO President: "Preparing Measures Over 20 Trillion Won with a Heart-Wrenching Resolve"

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Jung Seung-il, President of Korea Electric Power Corporation (KEPCO), stated on the 21st, "The power group companies (10 in total), including KEPCO and the six power generation companies, will accelerate the implementation of a financial soundness plan exceeding 20 trillion won to minimize the burden on the public before adjusting electricity rates."

In a statement regarding the electricity rate increase issued that morning, President Jung said, "With a resolute mindset, we will promptly prepare and announce additional measures that include labor cost reductions, organizational workforce innovation, support for energy-vulnerable groups, and plans to enhance public convenience."

Regarding recent media reports about some KEPCO employees' families engaging in solar power businesses and the audit results of Korea Energy Engineering University, President Jung said, "KEPCO takes this matter very seriously and will sincerely cooperate with audits by the Board of Audit and Inspection and the Ministry of Trade, Industry and Energy." He added, "Based on the results, we will swiftly devise thorough self-purification measures, including preventive actions such as improvements to systems and procedures." Currently, the Board of Audit and Inspection has begun auditing the solar power businesses of KEPCO employees and their families, and the Ministry of Trade, Industry and Energy plans to conduct an audit of the Energy University.

The statement also mentioned the necessity of the rate increase. President Jung appealed, "Despite these efforts, the current electricity sales price is significantly below the electricity purchase price. If the rate adjustment is delayed, it could cause disruptions in stable power supply, distortions in financial markets due to increased KEPCO bond issuance, and instability in the energy industry ecosystem, all of which would have considerable impacts on the national economy." He earnestly requested, "Considering this, we sincerely ask for the deep understanding of the public regarding the inevitability of timely electricity rate increases."

This statement came after a meeting between the ruling and opposition parties the previous day, where stronger self-help measures from KEPCO were demanded. Park Dae-chul, Policy Committee Chairman of the People Power Party, criticized, "Before asking for (electricity and gas) rate hikes, we urged them to make more painful structural efforts, but there was no response, which is regrettable." He added, "KEPCO employees installed solar panels under family names and invested hundreds of billions of won in the Energy University," and criticized, "They concealed the results of internal corruption audits and showed no remorse for their reckless management." He pointed out that KEPCO is trapped in moral hazard, intimidating the public by saying, 'If rates don't increase, we will all die together,' engaging only in public opinion manipulation.

Chairman Park had also demanded additional self-help measures from KEPCO at a ruling-opposition meeting held on the 2nd. At that time, KEPCO and Korea Gas Corporation reported plans to reduce costs by 14 trillion won each, but Chairman Park rejected this, saying, "We need to think more deeply about whether the public can agree to this level." Ultimately, the two companies decided to announce new management innovation measures, including labor cost reductions, unnecessary asset sales, and equity adjustments. Following Chairman Park's strong criticism of KEPCO the previous day, President Jung immediately issued the statement the next day.

Within the energy industry, the statement is interpreted as a reluctant concession. Inside KEPCO, there is growing dissatisfaction with criticism of reckless management. A KEPCO official said, "I don't understand why only the parties involved (KEPCO and Korea Gas Corporation) were excluded from the meetings about the rate increase." He also lamented, "Is it reasonable to expect cost reductions exceeding the market capitalization (about 12 trillion won)?" and added, "More than 80% of KEPCO's budget is for electricity purchase costs, so what does reckless management have to do with this?"

[Image source=Yonhap News]

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