Energy mix in South Korea (Yonhap)
South Korea's five state power companies are projected to post large losses this year due to a government push to reduce dependence on coal for electricity generation and low electricity prices, their internal documents showed Tuesday.
The five firms -- Korea South-East Power Co., Korea Midland Power Co., Korea Western Power Co., Korea Southern Power Co. and Korea East-West Power Co. -- are predicted to register a combined loss of 1.3 trillion won ($1.18 billion) this year, according to their 2021 budget plans.
Korea South-East Power is expected to chalk up the largest net loss of 350 billion won, with other firms' deficits likely to reach the 200 billion-won range.
The power generators are all subsidiaries of South Korea's state power monopoly, the Korea Electric Power Corp. (Kepco).
According to industry sources, their profitability will surely worsen due to the government's drive to cut its dependence on coal-fired electricity generation.
Seoul is seeking to drastically trim its reliance on coal-fired power generation in an effort to help reduce greenhouse gases and fine dust.
Making matters worse, low electricity rates stemming from weak international oil prices are feared to further weigh on their bottom lines this year.
For instance, one state power company has set the average system marginal price (SMP) for electricity sold at 66.09 won ($0.06) per kwh, a 14-year low and lower than last year's 68.52 won.
Due to their bleak earnings outlooks, the five electricity companies have decided to establish a joint task force to overhaul the electricity market and tackle worsening profitability. (Yonhap)