Revisiting the nuclear phase-outKorea’s top state enterprise and utility powerhouse Korea Electric Power Corporation (Kepco) is slipping deeper into crisis. Its consolidated operating loss widened to 814.7 billion won ($717 million) in the first half of the year, a steep turnaround from a profit of 2.3 trillion won during the same period in 2017. Its operating loss reached 687.1 billion won in the second quarter, its third consecutive quarter in the red.
The yawning deficit largely owes to the closing of nuclear reactors. After it shut down two aged reactors — one ahead of its life span — under President Moon Jae-in’s campaign pledge to wean the country off nuclear power, the utility firm had to rely more on private generators to keep up supply.
Kepco resells electricity it buys from the exchange to homes and companies. The firm mostly purchases electricity generated from public nuclear reactors and coal-fueled power stations. But under the government’s policy to shift away from nuclear and fossil-fueled power, it had to turn to more expensive electricity generated from privately-run natural gas-powered plants. It purchased 2.1 trillion won worth more from the private sector in the first half compared with a year-ago period.
It does not take an expert to figure out that a deficit is inevitable if production cost goes up while sale price stays fixed. The core of the problem is the reduced operation rate of nuclear reactors. The operation rate of reactors fell to 58.8 percent in the first half from 74.7 percent in the same period last year. Since it cannot get enough cheap energy supply from nuclear generators, the public utility company has to buy power at higher prices from the private sector. Kepco claims that the operational rate of reactors came down for a maintenance checkup. But the real reason lies with the government’s nuclear phase-out policy.
As long as the government keeps to its phase-out policy, reactor reliance will decrease further and Kepco’s losses will continue. If the utility comes under management risk, it inevitably has to push up electricity charges. Kepco cannot be shut down because its primary business is to supply energy for the nation. Tax funds would have to be injected to clean and keep up the mammoth company. If the phase-out policy hurts consumers and undermines energy security, the president’s campaign promise should be revisited. The country seriously needs to rethink phasing out nuclear power.