KEPCO to hike electricity prices for large firms, downsize organization amid soaring debt

KEPCO CEO Kim Dong-cheol announces the state-run utility provider’s restructuring plan and increase of electricity rates for industrial use at the Sejong Government Complex, Wednesday. Yonhap

State-run utility provider to cut 2,000 jobs to save costs

Korea Electric Power Corp. (KEPCO) will increase electricity rates for large companies and restructure through asset sales and reduction of workforce as it aims to overcome a debt crisis amounting to around 201 trillion won ($153 billion), its CEO said, Wednesday.

“The financial crisis of KEPCO, which began with a sharp increase in global energy prices, has reached a financially unsustainable limit for the company,” KEPCO CEO Kim Dong-cheol said during a press conference in Sejong along with Kang Kyung-sung, second vice minister of the Ministry of Trade, Industry and Energy, which is responsible for determining electricity rates.

“Through the extraordinary restructuring measures announced, we will exert all available efforts to overcome this desperate crisis,” the CEO added.

Under its self-rescue plan, KEPCO will increase electricity rates for large-sized companies by 10.6 won ($0.0081) per kilowatt-hour from Thursday. However, KEPCO decided to freeze the electricity rates for small and medium-sized enterprises, residential users and small business owners.

Among industrial users, those classified as large businesses account for approximately 42,000, just 0.2 percent of the total power consumption users. However, in terms of power consumption, they make up nearly half, at 48.9 percent, which is expected to help address KEPCO’s financial difficulties.

With this rate increase, KEPCO expects to increase its sales by 400 billion won this year and 2.8 trillion won next year.

KEPCO's headquarters in Naju, South Jeolla Province / Yonhap

As part of the restructuring plan, over 2,000 employees will be reduced and assets sold. A voluntary early retirement program will be implemented, and high-ranking officials will return part of their wage increases for the next year, KEPCO said.

The corporate headquarters organization will also be reduced by 20 percent, restructuring from the current 8 headquarters and 36 divisions to 6 headquarters and 29 divisions. Regional branch offices will be consolidated into larger regional offices, the utility provider added.