The government’s plan to shift to renewable energy from nuclear and coal power is hitting Korea Electric Power Corp. (KEPCO) with snowballing losses. Analysts say that the rates for electric power will inevitably be raised. According to regulatory filing by KEPCO, the state-run utility company sustained a 127.6 billion won operating loss in the first quarter. It recorded a deficit for two consecutive quarters for the first time in more than five years. Though its total sales grew 3.7 percent to 15.7 trillion won, KEPCO recorded losses due to rising costs. While it has not raised the rates it charges consumers, its costs have surged steeply as it is increasingly sourcing electricity from expensive LNG-fueled power plants instead of nuclear reactors following the administration’s nuclear-free policy. The utilization rate of nuclear reactors fell to 58 percent in January, with eight of the country’s 24 nuclear reactors having halted operations. Before the country adopted the nuclear-free policy, the average annual utilization rate stood at over 80 percent. Analysts expect KEPCO to continue suffering for some time. KEPCO CEO Kim Jong-kap had also announced upon his inauguration last month that the company will enter “emergency management” to cut costs. “The low utilization rate of nuclear reactors is not a short term issue. It will be a long term trend based on the shift of the national energy strategy,” said Shin Hyun-joon, an analyst at Hanwha Securities. He expects strengthened safety regulations will restrict increasing utilization of nuclear reactors.
Korea Times 15th May 2018 read more »