Korea Electric Power Corporation (KEPCO) President Kim Dong-cheol stated that a minimal increase in electricity rates is necessary to secure funding for the rapidly growing investments in the power grid. He noted that with the company's debt ratio reaching 400%, it is becoming increasingly difficult to rely on external borrowing for large-scale power grid investments.
During a National Assembly audit on climate and energy on October 19, Kim said, "I believe that at least the funding required for power grid construction should be secured through public burden, and I think there is a need for a minimal increase in electricity rates."
On the same day, lawmaker Lee Jong-bae from the ruling People Power Party focused on questions regarding measures to secure funding following a reduction in the issuance limit of KEPCO bonds. The bond issuance limit was temporarily expanded in 2022 due to KEPCO's significant losses but is set to expire at the end of next year.
When Lee asked how KEPCO would cover necessary funding if its bond issuance capacity decreases, Kim responded, "We have decided to receive 500 billion won in government financial support next year, and we are considering various self-help efforts, as well as private loans and general borrowing."
He emphasized, "Ultimately, with KEPCO's debt ratio at 400%, and power grid construction being a fundamental task of KEPCO, it is necessary to secure funding for power grid investments through public burden."
Lawmaker Ahn Ho-young from the Democratic Party referenced projections from the 12th Basic Plan for Power Supply and Demand, which anticipates that maximum power demand will increase by approximately 27 gigawatts to 165 gigawatts by 2040. He questioned how additional funding for power grid expansion would be secured, given that the 11th plan already requires about 113 trillion won in investments for the transmission and distribution network by 2038.
In response, Kim acknowledged that funding has generally relied on electricity sales revenue and external borrowing, but he believes it is inappropriate to depend on external borrowing for KEPCO's power grid investments, which are part of its core responsibilities.
When Ahn inquired whether KEPCO is considering raising electricity rates as a means of securing its own funding, Kim replied, "We have not yet discussed this in detail with the government, but given the essential investments needed for the power grid and the rapid increase in these investments, I believe we need to discuss a minimal increase in electricity rates with the government from various perspectives."
Regarding the potential inflationary impact of an electricity rate increase, Kim expressed that there is no need to approach the issue too sensitively. He stated, "I believe the government does not need to view electricity rate increases too sensitively, as the current electricity pricing system in South Korea is very transparent, and the level of electricity rates needed to at least cover costs is not excessively high."
He added that even if the Electricity Commission is restructured as an independent regulatory body, "there will be no situation where electricity rates rise excessively, undermining the competitiveness of households or businesses."
As of the end of the first half of this year, KEPCO's consolidated debt exceeded 210 trillion won. With the additional investments required for the new transmission and distribution networks under the 12th Basic Plan, KEPCO's funding burden is expected to increase further.
Kim also identified workforce expansion as a challenge in response to the increased investment in the power grid. He noted, "Until now, we have been utilizing personnel from other areas efficiently for power system construction, but I believe we have reached the limits of that approach, and we are requesting the government for the necessary workforce."
* This article has been translated by AI.
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