Korea Electric Power Corp (KEPCO), South Korea’s biggest electricity provider, has posted its second consecutive quarterly profit in a rare turnaround that outstripped market forecasts, with the increase in electricity rates and the sharp decline in global energy prices driving its revival.
The utility on Monday said that for the last quarter of the year, it had an operating profit of 1.88 trillion won (US$1.4 billion), which was up 71 percent from market consensus and a massive improvement from a loss of 10.82 trillion won for the same quarter the previous year.
After accumulating nine quarters of red ink, the state-run utility swam into the black in the third quarter of 2023, positioning itself for an impressive annual showing that saw losses trimmed to 4.57 trillion won for the year from a record shortfall of 32.65 trillion won in 2022.
Electricity rates were adjusted upward by KEPCO three times last year at a cumulative increase of 26.8 percent per kilowatt-hour, helping to bring its charges more into line with the actual costs of coal and natural gas.
Despite the impressive earnings, concerns are lingering that they might keep a freeze on electricity rates in place for an extended period and magnify the utility’s liabilities.
The current power rates have been held in part by KEPCO to account for governmental and political considerations, especially in the run-up to Wednesday’s general elections, raising the complexity of its financial management.
Having liabilities of 204.06 trillion won and making interest payments of 11.8 billion won daily have left KEPCO pressure to adjust power rates further post-elections.
Analysts have said they expect KEPCO to mull a hike in electricity bills beginning in the third quarter, as the company needs to make heavy investments in power transmission and distribution infrastructure, to include a major semiconductor cluster in Yongin — underscoring the utility’s financial health as a linchpin for South Korea’s broader economic ambitions.
The utility’s performance and strategic choices as it confronts such challenges are central to discussions on energy policy, pricing, and sustainability in South Korea’s rapidly evolving economic landscape.
