Kepco can't pay its own electricity bills

Power meter at a low-rise apartment in Seoul in March. [NEWS1]

The Korea Electric Power Corp. (Kepco) is asking to delay its payments to power plants for electricity.

The Ministry of Trade, Industry and Energy, Kepco and state-owned power plants held a meeting recently in which they agreed to amend a regulation to give Kepco more time to pay for electricity it purchased.

Under the regulation, if Kepco fails to make payments on time, it would be considered in default. As the country’s sole electricity buyer, Korea’s power distribution system could face major problems including blackouts if this happened.

Korea Power Exchange’s regulatory reform committee is set to decide on the changes to the payment system. They will be reviewed by the government’s Electricity Regulatory Commission for implementation in May.

“During the meeting, there were concerns that Kepco’s credit rating could be weakened if late payments are allowed,” said an official from the power industry. “However, everyone agreed that there is a need to prevent a major crisis due to Kepco's failure to make payments.”

Last year, Kepco reported its largest loss ever and could face even larger losses this year due to the government's stabilization of electricity bills as part of its efforts to control inflation.

The war between Russia and Ukraine has caused a surge in what Kepco owes.

The wholesale electricity price last month was 192.75 won per kilowatt hour, an all-time high since the opening of the Korea Power Exchange in 2001 and 128.9 percent higher than a year ago.

Kepco has issued corporate bonds worth 11.9 trillion won this year, exceeding the 10.4 trillion won issued through the whole of last year.

Last year, the government adopted a new power billing system that would reflect changing global energy prices every three months. But despite rising global energy prices, the government has denied Kepco’s request to raise electric bills.

“Fuel prices have surged sharply but that has failed to be incorporated into electric bills,” said Yoo Seung-hoon, a Seoul National University of Science and Technology professor of energy policy. “To fundamentally solve Kepco’s losses, the newly adopted billing system should be normalized.”

BY SOHN HAE-YONG [lee.hojeong@joongang.co.kr]