Kepco Shares Drop After It Refrains From Raising Power Bills
(Bloomberg) -- Korea Electric Power Corp. shares headed for their biggest loss since early last year after it refrained from raising power charges, threatening more financial strain at the utility.
Most Read from Bloomberg
The state-owned company said it will freeze the fuel adjustment price — a component of the bill for consumers that moves depending on the cost of gas and coal imports — for the quarter through December.
Kepco fell as much as 8.9% in Seoul. A close at that level would be the biggest drop since January 2023.
The utility posted a record operating loss in 2022 after it didn’t substantially raise electricity rates despite a surge in its cost of importing coal and gas, with the government choosing to shield consumers from rising living expenses. Delays in lifting power could force Kepco to implement restructuring measures, including asset sales, and may jeopardize efforts to decarbonize the nation’s power grid.
Not boosting power rates would run counter to comments from Chief Executive Officer Kim Dong-cheol, who emphasized the need to normalize Korean power bills in a recent Bloomberg interview. Kepco hasn’t increased rates so far this year.
There’s still a chance that other components of consumer power bills could be increased for the for the quarter, a Kepco spokesperson said.
The Korean government hasn’t changed the the fuel adjustment price since 2022, even though liquefied natural gas and coal prices have eased since then. While this does provide the utility some relief, the company needs to further boost rates to recoup losses over the last few years.
(Updates with details throughout.)
Most Read from Bloomberg Businessweek
Palantir’s CEO and Wall Street Annoy Each Other Straight to the Bank
Five Reasons to Be Optimistic About the Entertainment Business
Xbox’s President on Handheld Consoles and Subscription Gaming
?2024 Bloomberg L.P.