Korea Electric Power Corp.'s outstanding bonds are projected to exceed the statutory ceiling by about 19.2 trillion won ($13 billion) in 2028. In December 2022, the National Assembly amended the Korea Electric Power Corporation Act to raise the cap on KEPCO bond issuance to five times the combined total of paid-in capital and reserves, up from two times. That special provision expires at the end of next year, when the ceiling reverts to two times. Even so, KEPCO's outstanding bonds are expected to keep climbing to 76.05 trillion won by the end of next year, while capital and reserves will stand at just 28.42 trillion won over the same period, according to the National Assembly Budget Office.
KEPCO was profitable under the Park Geun-hye administration before swinging to massive losses under the Moon Jae-in government. The reversal came as the government pursued a nuclear phase-out policy and failed to pass sharply higher generation costs on to electricity rates. In 2022, when the war in Ukraine drove up the cost of importing liquefied natural gas, KEPCO's losses reached about 32 trillion won. The utility barely returned to profit after the nuclear phase-out policy was scrapped. Yet electricity rates have been raised only for industrial users, in November 2023 and October 2024, while household and general rates remain frozen. With spending on new power plants and grid expansion surging to meet the spread of artificial intelligence, KEPCO is now issuing bonds to roll over its debt. Strapped for cash, the utility proposed last month that Samsung Electronics and SK hynix prepay 25 trillion won in electricity bills covering five years, an offer both companies declined.
The government must stop trying to ride out KEPCO's financial crisis with stopgap measures that merely buy time. Next year's budget for the Ministry of Climate, Energy and Environment includes 850 billion won in support for KEPCO, a drop in the bucket against the utility's debt of more than 210 trillion won. The government has pledged an early start to construction of a semiconductor complex in the Honam region and promised to expand power supply infrastructure, but it has not spelled out how it will ease the resulting investment burden on KEPCO. There is only one direct approach: bringing long-frozen household and general electricity rates in line with costs. That must be paired with painful additional self-rescue measures by KEPCO. In December 2022, the Democratic Party of Korea, then in opposition, criticized raising the bond issuance ceiling as a stopgap. Now in power, it must deliver a fundamental solution consistent with its own assessment.