KEPCO shows signs of frustration with Moon gov't

Korea Electric Power Corp. (KEPCO) has decided to disclose its costs for generating electricity, an unprecedented move to counter the Moon Jaein administration's move to lower utility bills for households at its expense, according to industry analysts Wednesday.

The state-run company is increasingly frustrated with the controversial government plan to relax the progressive electric billing system ahead of the summer, charging users less than in the past even if they consume power extensively, for example to run their air conditioning, it said. Last summer, many households were angry with the government over higher utility bills.

Lower utility bills for households mean lower revenue for KEPCO, which has already been reeling from mounting losses over the past two years amid the Moon administration's anti-nuclear energy policy.

During an open hearing on the government's proposed progressive electricity pricing system reform Tuesday, KEPCO operations department head Kwon Kibo said the firm will reveal "what comprises the cost for electric power in the second half of the year" and unveil different costs for different types of electricity, such as for industrial and household uses.

Currently, KEPCO is revealing "the overall cost" for electricity once a year, but has not disclosed respective costs for the industrial, household and agricultural sectors and for other purposes.

Kwon's remark came after KEPCO posted an operating loss of 208 billion won ($176 million) last year which is attributable to the Moon government's policy to phase out nuclear power.

Despite the losses, the three proposed reforms for the electricity pricing system revealed Monday were all about cutting the power rate, incurring up to 300 billion won in additional costs for KEPCO.

The analysts said this is what led the power company to announce it plans to show why it is piling up losses, without prior consultation with the government. KEPCO said it has been urging the energy ministry to disclose the details of the costs, but did not consult with the ministry before Tuesday's announcement.

"The move seems to be a sign of KEPCO's frustration that it cannot endure any more losses," said Lee Duckhwan, a professor at Sogang University.

"When the cost structure is disclosed, all unreasonable pricing factors, such as industrial power being more expensive than household power, will come to light. And this will trigger massive criticism from not only domestic shareholders but also foreign investors."

KEPCO is listed on Korea's KOSPI and the New York Stock Exchange.

"The government's misunderstanding is that KEPCO is not just a firm under its control. KEPCO is a listed firm having shareholders other than the government. The announcement seems to be KEPCO's ｅxpression that it has to take care of other shareholders and follow market logic."

The state-run Korea Development Bank is the largest shareholder in KEPCO with 32.9 percent, followed by overseas investors with 27.07 percent and the government with 18.2 percent.

During the hearing, a number of disgruntled KEPCO investors argued that the power company should not shoulder burdens stemming from the government's proposed electricity rate cut, denouncing the administration for employing a "populist policy."

One of the investors threatened that individual KEPCO investors will jointly file a suit against KEPCO management on the charge of breach of trust.

"The government's proposed electricity rate reform plans are designed to encourage energy consumption by lowering the rate," Lee said. "In that case, there should be a plan for increasing the supply, but there is no such thing. If the rate is reformed as proposed, KEPCO will suffer difficulties in supplying enough power especially under the Moon government's post-nuclear and post-coal policies."