Result of Government's Nuclear Phase-out Policy
The Ministry of Economy and Finance and the National Assembly Budget Office announced on July 19 that the debts of Korea Electric Power Corp. (KEPCO) and its six subsidiary power companies increased by no less than 14.6 trillion won in 2019. Specifically, the debts amounted to 128,078.1 billion won and the red ink of KEPCO in particular reached an 11-year high last year.
This has to do with the Moon Jae-in administration’s nuclear phase-out policy. The seven companies’ net losses attributable to less use of electricity totaled 2.3 trillion won and their borrowings increased by 6.8 trillion won in relation to investment in power generation facilities. Their lease liabilities increased 4.8 trillion won after accounting standard revision. In addition, the accrued liability of Korea Hydro & Nuclear Power (KHNP) increased 2.6 trillion won with regard to nuclear power plant decommissioning and restoration and spent nuclear fuel treatment.
KEPCO’s debt ratio continued to increase under the current administration, from 91 percent to 113.4 percent from 2017 to 2019 to be exact. That of KHNP rose from 114.2 percent to 132.8 percent during the same period. When it comes to the subsidiaries, Korea South-East Power’s debt ratio increased from 100 percent to 126.6 percent and those of Korea Midland Power and Korea Western Power rose from 168.3 percent to 241.2 percent and from 148 percent to 173.1 percent, respectively. Besides, those of Korea Southern Power and Korea East-West Power went up from 135 percent to 159.8 percent and from 92.8 percent to 107.1 percent, respectively.
For KEPCO and KHNP, the nuclear phase-out policy means more and more investment for renewable energy-based power generation facilities and less and less power demand and sales. For example, KHNP is supposed to increase the capacity of its solar power facilities to 5.4 GW by 2030, which is equivalent to four nuclear power plants. The KEPCO subsidiaries are supposed to invest a total of 5.8 trillion won in renewable energy facilities until 2022.
COVID-19 is likely to further exacerbate their conditions. International oil prices are showing no signs of rebounding, causing the system marginal price to fall, and the ongoing decline in industrial power demand is adding to the debts of the power generation companies.