Kepco reports an operating loss, the first in six years

Korea Electric Power (Kepco) suffered its first operating loss in six years despite strong demand and an increase in power sales.

The state-owned utility said that the loss was related to higher fuel costs. It added that the government’s policy of reducing the use of nuclear power was not a major factor in the results.

According to the company Friday, 2018 revenue grew 1.4 percent to 60.6 trillion won ($53.8 billion). It reported a 208 billion won operating loss for the year, compared with a 4.9 trillion won operating profit in 2017.

The company suffered a net loss of 1.1 trillion won in 2018, compared with a net profit of 1.4 trillion won in 2017.

Since the last quarter of 2017, the power company has been suffering quarterly operating loss. In the fourth quarter of last year, the operating loss totaled 788.5 billion won.

The operating losses have come as power usage has increased.

In part due to the heat wave last summer, power consumption was up 3.6 percent in 2018. In 2017, total usage was up 2.2 percent. Household power use was up 6.3 percent, while general power use grew 5.1 percent.

Analysts have cited the Moon Jae-in government’s policy of dismantling nuclear power plants to explain the loss, but Kepco blamed rising fuel prices. In 2018, the price of Dubai crude was up 30 percent year on year, while the price bituminous coal rose 21 percent and liquefied natural gas 16 percent.

Kepco said, largely because of rising fuel prices, its expenses increased 3.5 trillion won. It added that the cost of buying power from private power producers grew 4 trillion won.

Extended maintenance of nuclear power plants also contributed to the operating loss. The operation rate of nuclear plants fell to 65.9 percent in 2018 from 71.2 percent in 2017.

“Although the intensified safety work on nuclear power plants did have an impact on performances, [that influence] has been miniscule,” said Park Hyung-duk, Kepco vice president.

Kepco said 82 percent of the increase in expenses was directly related to higher fuel costs, rising power demand and government policy. The contribution from the fall in the operation rate of nuclear plants was only 18 percent.

The company said the situation will likely improve in 2019 as international fuel prices started stabilizing in the fourth quarter of 2018 and the operation rate of nuclear plants has been increasing.

The price of Dubai crude is forecast to fall from $69 per barrel in 2018 to $62 this year.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]