Power company is forecast to see its financial condition take a turn for worse in the wake of weaning nuclear power use
President Kim Jong-kap of Korea Electric Power Corp. (Photo: KEPCO)
Korea Electric Power Corp. (KEPCO) is predicted that its financial soundness will take a turn for worse, caused by a rise in policy costs related to the expansion of new and renewable energies in accordance with the government’s energy paradigm shift away from nuclear power.
KEPCO’s position was that the performance deterioration was not caused by the government’s energy paradigm shift of weaning nuclear power off the nation. But a public filing of a business performance report, issued to investors, contained information saying otherwise.
The 2018 business report filed to the Financial Supervisory Service (FSS) said financial conditions are forecast to be exacerbated by a rise in policy costs required for massive facility investments to brace for a shift in an energy mix and the expansion of new and renewable energies.
KEPCO has as subsidiaries Korea Hydro & Nuclear Power Co., Korea South-East Power, Korea Southern Power, Korea East-West Power, Korea Midland Power, and Korea West Power.
The report said that rising investments designed to secure power networks in the implementation of the energy paradigm shift and stable connection of power networks are expected to come to the fore.
The government’s energy paradigm shift calls for raising the portion of new and renewal energies out of total power generation to 20 percent by 2030. The figure was contained in the 3rd national energy master plan released on April 19. According to the plan, the government aims to raise the portion of new and renewable energies from 7.6 percent to 20 percent by 2030 and between 30 percent and 35 percent by 2040.
KEPCO is expected to have a hard time if the power company expands investments into new and renewable energies in keeping with the government‘s energy paradigm shift.
In the report, KEPCO said the company saw a rise in the costs of purchasing electricity from private power producers in return for lowering the use of nuclear power units. The reason is that KEPCO has to substitute low-cost nuclear power for higher-cost LNG.
Total debts of KEPCO and its connected companies stood at 114.156 trillion won as of the end of last year, up 4.9 percent over the same period time of the previous year. Explaining the background of rising debts, the report said on top of debts related to the purchasing of electricity from IPPs, borrowings related to power equipment investment and insufficient funds increased to 6.287 trillion won.
According to the consolidated financial statement, overall sales jumped 3.5 percent, influenced by rising temperatures in summer and dropping temperatures in winter, but when a 0.6 percent drop in unit price was factored, net sales rose 1.4 percent in 2018 to 60.627 trillion won over 2017.
A view of KEPCO Headquarters in Naju, Jeollanam-do.