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'It's inevitable to raise electricity prices to reduce KEPCO's debt,' says CEO
Kim Dong-cheol, CEO of KEPCO, speaks during a meeting with reporters at a restaurant in Sejong, Wednesday. Courtesy of KEPCO
By Ko Dong-hwan
The new head of the state-run utility company said Wednesday that a rate hike this year is inevitable as a necessary means to help resolve the state firm's debt, which has grown to 201 trillion won ($147 billion).
Kim Dong-cheol, CEO of Korea Electric Power Corp. (KEPCO), said a 25 won increase per kilowatt hour (kWh) should be implemented to "normalize" the company's operations amid its snowballing debt.
The costs in power generation have jumped by a huge margin but that hasn't been taken into account in calibrating the power usage rate, pushing the company's debt to over 200 trillion won, said Kim at a restaurant in Sejong where he met with reporters. Without the power rate being adjusted, KEPCO's financial deficits cannot improve, he said.
"Every operation by KEPCO will be halted and the country's power ecosystem will be demolished (without the rate hike)," Kim said during the meeting. "This is the problem that needs decisive action."
The company should have raised the power rate by 45.3 won per kWh, an amount required to comply with energy pledges previously made by the government, according to Kim. Raising the rate to the 25 won-mark is the least the company should do to sustain the country's fuel demands, he added.
Kim said KEPCO will announce a self-reliant rescue plan later this month, which will drastically reshuffle the company's internal organization.
The company previously raised the country's power rate by 21.1 won per kWh during the first and second quarters of this year. The figure falls short of the level of the rate hike previously suggested by the government to resolve the company's debt ― 51.6 won per kWh.
Failing to make the rate adjustment at the right time following the Russian invasion of Ukraine in February 2022, which caused a surge in energy prices worldwide, the company has recorded a sales deficit of over 47 trillion won from 2021.