Largest Deficit since 2008
Korea Electric Power Corp. (KEPCO) posted an operating loss of over 1.3 trillion won in 2019, the largest since it recorded a deficit of more than 2.7 trillion won in 2008.
KEPCO announced on Feb. 28 that its provisional operating loss was estimated at 1.36 trillion won on a consolidated basis. The deficit increased more than six-fold from the previous year's operating loss of 208 billion won. Its sales decreased by 1,534.8 billion won to 59.09 trillion won.
KEPCO put the blame on a drop in earnings from electricity sales, increased costs for GHG emissions right purchases, and an increase in facility investment. First of all, last year's electricity sales shrank by 930 billion won from 2018 due to a decrease in demand for heating and cooling. In 2019, the average temperature in summer stood at 1.3 degrees Celsius lower than 2018. In winter, it was 2.2 degrees Celsius warmer in 2019 than in 2018.
Its GHG emission right acquisition costs increased more than 13-fold from 53 billion won in 2018 to 709.5 billion won in 2019. The Act on the Allocation and Trading of Greenhouse Gas Emission Rights, which has been in force since 2015, defines the amount of greenhouse gases that each company can emit for free. If a company emits more than this amount, it has to buy greenhouse gas emission rights. This allocated volume was reduced 18 percent from 280 million tCO2 in 2018 to 171 million tCO2 in 2019. As a result, KEPCO had to spend more than 650 billion won to acquire emission rights.
Nuclear power-related recovery liabilities also rose by 1847.4 billion won from 2018. KEPCO explained that a rise in the liabilities stemmed from an increase the cost of radioactive waste management and nuclear power plant dismantlement. The unit cost of managing low- and mid-level waste per drum climbed from 13.73 million won in 2018 to 15.19 million won in 2019, and the allowance for the dismantlement of nuclear power plants per unit swelled from 751.5 billion won to 812.9 billion won in the same period.
On the other hand, its fuel cost slid due to falling oil prices and a higher utilization rate of nuclear power plants. In 2019, its nuclear plant utilization rate hit 70.6 percent, up from 65.9 percent in 2018. On the other hand, its utilization rate of coal-fired power plants fell from 74.7 percent to 70.7 percent over the same period due to the government's countermeasures against fine dust emissions.