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Profitability miscalculated in Wolsong-1 early closure: BAI

Nuclear reactor will stay closed, but report reignites debate over Moon administration’s anti-nuclear drive

View of Wolsong-1 nuclear reactor in Gyeongju, North Gyeongsang Province. The plant was found in an inspection from the Board of Audit and Inspection have been assessed with underetimated economic viability in its early closure decision. (Yonhap)
View of Wolsong-1 nuclear reactor in Gyeongju, North Gyeongsang Province. The plant was found in an inspection from the Board of Audit and Inspection have been assessed with underetimated economic viability in its early closure decision. (Yonhap)
Korea Hydro & Nuclear Power underestimated the economic viability of the country’s second-oldest nuclear reactor before its earlier than scheduled closure last year, the top audit watchdog said Tuesday.

Wolsong-1, a 679-megawatt reactor in Gyeongju, North Gyeongsang Province, was retired from operation in December last year, in what was billed as a milestone in President Moon Jae-in’s anti-nuclear initiative.

But debates lingered surrounding KHNP’s decision, with nuclear proponents saying the political push may have hampered a fair, comprehensive review.

While saying that the future profitability of Wolsong-1 was assessed unreasonably low, the Board of Audit and Inspection said its inspection was limited to the economic aspects of the power plant and was not to be taken as a conclusion on the legitimacy of the shutdown decision, which took into account several other factors such as safety.

“Besides the economic factor, other general aspects were considered, including safety and acceptance by the local community,” the BAI said in its report Tuesday. “Safety and region-based elements were excluded from the scope of this audit.”

Built in 1983, Wolsong-1 stopped running in November 2012 after completing its 30-year life cycle. KHNP spent 700 billion won ($614 million) for a 10-year extension, and the reactor reopened in June 2015 after refurbishment and maintenance. It was scheduled to be retired from operation in November 2022.

KHNP decided on the refurbishment based on its own research suggesting that Wolsong-1 could provide additional economic benefits worth nearly 4 trillion won if it continued running.

At a board meeting in June 2018, however, the company decided to shut it down early, citing another study it had carried out based on energy prices, which cast doubt on the reactor’s future economic profitability.

KHNP projected that the unit price of electricity would fall from 59.26 won per kilowatt-hour to 52.67 won in 2019, but instead it posted 58.31 won last year.

KHNP employees were aware of the faulty estimate but allowed the assessment project to proceed, the BAI said. Officials from the Ministry of Trade, Industry and Energy, which oversees KHNP, were also involved in the decision process, the watchdog said.

Wolsong-1’s early closure has been hotly debated amid broader debates over the Moon administration’s zero-nuclear policies.

It was the second nuclear reactor to close in South Korea, following the retirement of the Kori-1 reactor in 2017. At present, 24 nuclear reactors are in operation in Korea, with 11 of them set to be shut down by 2030 upon completing their life cycles.

The Moon administration is set on phasing out more nuclear plants by not granting life cycle extensions for existing ones. It has also canceled or suspended construction plans for six new reactors, some of which had already broken ground.

Tuesday’s audit report drew sharply different reactions from political factions, civic groups and the government.

KHNP said it accepted the findings and vowed to come up with better ways to assess a nuclear reactor’s economic value. A ranking official at the Industry and Energy Ministry, however, stressed that the problems found with Wolsong-1 will not affect the government’s energy policies as a whole and it will continue to push for a U-turn away from fossil fuels and nuclear energy.

Environmentalists said the BAI’s audit was flawed from the beginning, as the reactor wouldn’t have been granted a new life if its safety risks had been properly factored in.

“The media and some people called it ‘early closure,’ but it was supposed to be retired in 2012 for the safety of the public,” an anti-nuclear group said in a statement.

The conservative opposition People Power Party called the BAI report a “death sentence” to Moon’s anti-nuclear policy, calling for measures to revitalize the local nuclear energy sector.

“The audit result has told the truth, and there is no more excuse left to continue going nuclear-free,” said Yun Hee-suk, a spokesperson for the People Power Party, in a statement Tuesday.

“The anti-nuclear policy overly pushed to fulfill the campaign promise of the president should be immediately retracted, and the government should work for the resurrection of the Korean nuclear power industry.”

The BAI said some officials from KHNP and the Industry Ministry had disrupted the inspection process.

BAI chief Choe Jae-hyeong told lawmakers last week that some public officials had “severely resisted” the audit and had caused delays by destroying evidence and giving false testimony.

The disruptions caused the BAI to submit the final report nearly eight months later than the original deadline of Feb. 29.

“It was the first time I ever saw resistance as fierce as this since becoming the chairman of the Board of Audit and Inspection,” Choe said last week. “Of course data was deleted, and involved officials didn’t testify truthfully. They hid the truth and submitted false documents.”

The BAI said Tuesday that it will not report any involved officials to law enforcement, but will provide the information to the investigative authorities as needed.

By Ko Jun-tae (ko.juntae@heraldcorp.com)
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