Still sticking to a phase-out?Although expected, the results nevertheless were stunning. The country’s state operator of nuclear reactors, Korea Hydro & Nuclear Power, logged 550 billion won ($487 million) in net losses on consolidated basis in the first half. The operation rate of nuclear reactors that typically hovered around 80 percent fell to 60 percent in the first half. Reduced yield naturally led to big losses.
The state entity usually reported a profit of billions of won and as much as over 1 trillion won in the first half. Until this year, it has never made a loss since it started disclosing its earnings in 2002. A profit-making company became a money-losing entity in just six months.
Its parent company, state utility Korea Electric Power Corporation (Kepco) is also in a pitiful state. Its losses ballooned to 1.05 trillion won in the first half because it had to rely more on costlier electricity from LNG-fueled generators to keep up power against reduced cheap supply from nuclear reactors.
As long as the government’s policy to phase out nuclear reactors stands intact, deficits will stretch. In order to prevent further losses, utility fees would have to go up. The government vowed that it would not raise electricity fees until 2022 while announcing it will wean the country off nuclear power.
If the financial state of Kepco and Korea Hydro worsens, they may not be able to keep up with repair and maintenance work that requires billions of dollars a year to ensure safety. If losses pile up, they would have to be cleaned up with tax money. The National Pension Service also has been hit by Kepco’s woes. As Kepco’s shares have plunged 32 percent over a year by skidding from 45,000 won to 35,000 won, the pension that holds a 6.4 percent stake in Kepco has already lost 600 billion won.
There is a simple answer to this. The government must reconsider its decision to wean this country off nuclear reactors. Without reliance on reactors, Kepco’s problems cannot be solved and a stable energy supply would be at risk. It must undo the policy before the damage gets worse.
JoongAng Ilbo, Aug. 16, Page 30