On Friday, securities analysts stated that an electricity fee hike is inevitable this year to help ensure KEPCO’s financial normalization, given the state-run electric utility’s cumulative debt of 202 trillion won ($147 billion) and a loss of 40 trillion won as of the end of last year.
KEPCO posted 1.2 trillion won in second-quarter operating profit, continuously making money over the past four quarters.
However, its operating profit has steadily declined, dropping from 2 trillion won in the third quarter of last year to 1.9 trillion won in the fourth quarter and further to 1.3 trillion won in the first quarter of this year.
Without earnings from its subsidiaries, KEPCO reported an operating loss of 92.8 billion won, marking its first loss in three quarters.
The government-owned enterprise explained that the loss was primarily due to a larger decline in profits from supplying electricity to consumers than a decrease in costs when purchasing electric power from power plants.
“We will counteract the changing business environments, as energy prices are expected to rise, due to the lingering conflict in the Middle East and a strong U.S. dollar,” a KEPCO official said.
Shinyoung Securities analyst Kwon Duk-min said KEPCO is in desperate need of an electricity bill hike to help improve its financial soundness.
“Its debt ratio reached 530 percent, so the company is presumed to be spending 4 to 5 trillion won every year to pay back interest,” the analyst said.
Eugene Investment & Securities analyst Hwang Sung-hyun said that KEPCO has provided sufficient justification for an increase in electricity bills 홀짝게임 during the fourth quarter. NH Investment & Securities analyst Lee Min-jae expects price hikes during the fourth quarter of this year and the second quarter of next year.
Last month, Trade, Industry and Energy Minister Ahn Duk-geun indicated the government’s intention to raise electricity bills during the fourth quarter, saying that he would talk with relevant ministries at the right moment and make efforts to normalize electricity prices.
KEPCO CEO Kim Dong-cheol also urged the government in May to make a minimal adjustment to electricity rates, emphasizing that the company has struggled with financial challenges.
However, bipartisan support for the proposal of cutting electricity bills for low-income households suffering from intensifying inflation has put the brakes on the government’s plans for a rate hike this year.
KB Securities analyst Jung Hye-jung also said that there is a slim chance of the government increasing the electricity bills during the second half of this year, considering the current inflation rate, which has remained higher than the government’s inflation rate target.