Kepco Takes a Breather... Power Prices 'Purchase Price < Selling Price' for Two Consecutive Months

May Electricity Statistics Monthly Report
Purchase Price per 1kWh 130.3 KRW · Selling Price 138.8 KRW
'Selling Price - Purchase Price' Increased from 6.6 KRW in April to 8.5 KRW in May
In May, Selling Price Exceeded Purchase Price Including RPS

Korea Electric Power Corporation (KEPCO) has been selling electricity to consumers at prices higher than the prices at which it purchases electricity from power producers for two consecutive months. In May of this year, the difference between the selling price and the purchase price increased to 8.5 won per kilowatt-hour (kWh), larger than the previous month. This means KEPCO's electricity sales revenue has increased accordingly.

According to KEPCO's May electricity statistics monthly report released on the 14th, the purchase price of electricity from public and private power producers was 130.3 won per kWh, which was 8.5 won lower than the selling price of 138.8 won.

Previously, in April, the electricity selling price exceeded the purchase price for the first time in 17 months since November 2021. The difference between the selling and purchase prices in April was 6.6 won, but in May, this gap widened to 8.5 won. Accordingly, the average purchase price (153.6 won) and selling price (143.2 won) difference from January to May this year was 10.4 won, down from 37.9 won during the same period last year.

In May, the selling price (138.8 won per kWh) was also higher than the purchase price including the Renewable Portfolio Standard (RPS) compliance cost (132.4 won per kWh). This is the first time in about 11 months since June last year that the selling price exceeded the purchase price including RPS.

The reason the selling price became higher than the purchase price is due to the downward stabilization of international energy prices and the increase in electricity rates. According to the Ministry of Trade, Industry and Energy, Dubai crude oil prices fell from $82.1 per barrel in January to $72.3 at the end of May this year. Liquefied natural gas (LNG) prices also dropped from $1,295.6 per ton to $676.6 during the same period. Electricity rates have increased five times from last year to May this year, rising by 40.4 won (39.6%) per kWh.

This downward trend in international energy prices combined with electricity rate hikes has led to expectations that KEPCO's second-quarter deficit this year will shrink to the 1 trillion won range and that it may return to profitability in the third and fourth quarters. However, this is insufficient to resolve KEPCO's large-scale deficit. KEPCO accumulated a deficit of 38.5 trillion won over two years from 2021 to last year. In the first quarter of this year alone, it posted a deficit of 6.2 trillion won, bringing the cumulative deficit to 44.7 trillion won.

An industry official said, "The recent increase in selling prices above purchase prices will have a positive effect on KEPCO's performance," but added, "KEPCO has been running a 'negative margin structure' where it sells electricity at prices lower than the purchase cost, resulting in deficits. Unless this structure is changed, it will be practically difficult for KEPCO to resolve its deficits."

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