Power plants prove cash cows despite outage fears

Private and state-run operators of thermal power plants in Korea registered stellar earnings last year despite a nationwide campaign to tackle a power shortage crisis, data showed yesterday, sparking criticism over their high electricity rates.

According to the data by the Financial Supervisory Service, the thermal power plant operators under the wing of energy conglomerates such as GS Group and SK Group reported an operating margin of more than 10 percent in the first nine months of last year. The operating margin refers to the ratio of operating profit to sales.

The operating margin of GS Power, which owns two thermal power plants, and its affiliate GS EPS operating two LNG combined cycle power plants stood at 10.6 percent and 12.6 percent, respectively.

SK E&S’ operating margin reached a whopping 65.2 percent in the period, while Posco Energy, operator of six LNG combined cycle power plants, posted 9.5 percent.

Other operators affiliated with state-run Korean Electric Power Corporation also reported good performances in the same period.

Korea Southern Power logged 376 billion won ($355 million) in operating profit in the first three quarters of last year, up 143.1 percent from a year ago.

Korea Midland Power racked up an operating profit of 318.2 billion won, up 93.9 percent from a year earlier, and that of Korea Western Power jumped 95.7 percent on-year to 279.3 billion won.

Meanwhile, Korea Hydro & Nuclear Power, the state-run operator of nuclear power plants in Korea, saw its operating profit margin fall 2.7 percentage points.

The good performances by the private energy companies touched off criticism over their high electricity prices. The government has taken measures to keep a lid on electricity prices since May 2008 by fixing a ceiling on electricity rates set by state-run power plant companies. But the private thermal power plant operators are not subject to the price ceiling.

The competition for thermal power plants among conglomerates is also getting tougher as thermal power plants emerge as a new cash cow. Six companies, including Posco Energy, are vying to clinch a government order to build a thermal power plant in Samcheok, Gangwon. Yonhap