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(EDITORIAL from Korea JoongAng Daily on July 4)

2018/07/04 06:59

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Fix the energy policy

On Sunday, Kim Jong-gap, president and CEO of the Korea Electric Power Corporation (KEPCO), a state-run utility, put a post entitled "Concerns of a tofu factory" on Facebook. The point of his post boils down to this: since the factory did not raise tofu prices even when the price of imported beans rose, its tofu price became cheaper than the price of the beans. As he compared Kepco to a tofu factory, the tofu price refers to electricity bills and the imported beans price means the cost of fuels such as coal and liquefied natural gas. In a nutshell, he tried to deliver the message that it is unavoidable for Kepco to raise its prices.

Kepco raked in more than 10 trillion won (US$8.97 billion) in operating profits between 2015 and 2016. But its financial health began to deteriorate under the liberal Moon Jae-in administration. Despite an operating profit near 5 trillion won in 2017, the company suffered an almost 130 billion won loss for two consecutive quarters: in the last quarter of 2017 and in the first quarter of 2018.

The drastic falling into the red owes much to the government's radical energy policy aimed at phasing out nuclear power plants. The share of nuclear reactors — whose cost of power generation is only two thirds of those powered by coal and half of LNG — rapidly decreased to 26 percent in 2017 from 29 percent a year before, and again plunged to 18 percent in the first quarter of this year.

In the meantime, the portion of electricity generation from coal increased to 43.4 percent in the first quarter of 2018, while the portion from LNG soared to 30 percent in the same period. Kepco must bear more of a financial burden due to the government's decision to slash the share coming from cheaper reactors.

Moreover, the government announced that it will cut domestic green gas emissions faster than originally planned. That will certainly lead to even higher electricity bills for ordinary citizens because it means construction of more solar panels or wind power plants in a small country instead of the much cheaper -- and environmentally clean -- nuclear reactors.

Nevertheless, the government insisted that electricity fees will rise by less than 1.3 percentage point until 2022 despite its relentless push for a nuclear phase-out.

If public corporation's deficit grows, the public must bear the cost. We urge the government to address the problems with its energy policy.

(END)

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