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Kepco reports worse results in 2019, may raise rates

Feb 29,2020
State-run utility Korea Electric Power Corporation (Kepco) has reported its largest operating loss since 2008 as weak electricity sales and increased financial costs hurt its bottom line.

The company announced in a regulatory filing Friday that its net loss also grew to 2.22 trillion won ($1.83 billion) last year from 1.17 trillion won a year earlier. In 2019, Kepco reported an operating loss of 1.35 trillion won, more than a six-fold increase from its 2018 operating loss.

The state-run utility’s sales reached 59.09 trillion won last year, down 2.5 percent on-year. Due to the poor yearly performance, Kepco’s debt ratio jumped from 160.6 percent in 2018 to 186.8 percent, or 128.8 trillion won.

It was the largest operating loss Kepco posted in an annual report since recording 2.78 trillion won lost in 2008, which resulted from inflated crude oil prices from the global financial crisis.

Kepco said last year’s poor performance was due to lower demand for electricity in households from moderate temperatures seen throughout last year, including fewer hot days during the summer. The utility’s electricity sales fell 1.1 percent on-year.

The company also acknowledged that a government-led initiative to reduce the operation of coal power plants and cut fine dust emission levels had an adverse effect on its performance. Kepco’s fuel expenses decreased 9.1 percent from a year earlier as crude oil prices fell throughout the year.

Yet some experts believe that the falling operation rates for nuclear power plants have also negatively affected Kepco’s earnings, a theory the company denied on Friday. The country’s nuclear operation rate fell to 70.6 percent last year from more than 80 percent in 2016.

Kepco added that its future earnings could be adversely affected by the coronavirus outbreak hindering the factory operations. To overcome losses, the company is expected to start hiking electricity rates and recharging fees for electric cars in the second half of this year.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]