Korea Electric Power : KEPCO recorded 5 trillion won of operating profit ...

KEPCONews

KEPCO recorded 5 trillion won of operating profit for FY2017

February 2018

Korea Electric Power Corporation announced its preliminary operating profit for 2017 as 4.95 trillion won, on a consolidated basis, which is decreased by 7.05 trillion won compared to 12 trillion won of 2016.

Net income for 2017 on a consolidated basis is 1.51 trillion won, which is down by 5.64 trillion won compared to 7.15 trillion won of 2016.

(in hundred million KRW)

The decrease of operating profit in 2017 was mainly attributable to; a) Revenues from overseas and other businesses decreased by 0.7 trillion won, while sales of electric power increased by 0.3 trillion won in 2017 resulting from a slight increase in electric power sales volume.

* Power sales growth : 1.3% (2015)→2.8% (2016)→2.2% (2017)

b) Operating expenses increased year on year, as purchased power cost increased by 3.5 trillion won, fuel cost by 2.5 trillion won, and depreciation cost by 0.8 trillion won.

The reasons for increase in operating expenses are as following;

a) Purchased power cost went up by 3.5 trillion won year on year.

• - Power generation by independent power producers mounted up due to prolonged overhaul periods of nuclear power plants for the safety inspection, and REC expenses also went up by 0.3 trillion won.

  * Nuclear power plants' overhaul periods : 1,373 days (2016)→2,397 days (2017)

• - Among 24 units of nuclear power plants, 10 units are currently under maintenance, of which 3 are under periodic overhaul and the rest 7 are under additional maintenance.

• - The Nuclear Safety and Security Commission has been inspecting the corrosion of 19 nuclear units with containment liner plate (CLP), after the corrosion of CLP of Hanbit unit #2 was found in June, 2016.

  17 out of 19 units are finished with the inspection, and 9 units were found with corrosion. 4 units have been completed with the repair and 5 units are under maintenance.

  Inspection for the rest 2 will be completed by April 2018.

• - The containment liner plate is the facility directly connected to the nuclear safety, as it is responsible for the prevention of radioactive leakage. As the corrosion of the CLP has been once spotted, it is inevitable that all of nuclear units to be inspected to secure the safety of the nuclear plants.

• - In this regard, KHNP will implement the maintenance thoroughly following the related standards and procedures.

  The Nuclear Safety and Security Commission plans to approve

the resumption of the nuclear power plants that are currently under the maintenance, when the safety of the power plants are secured and confirmed in accordance with the standards set under the Nuclear Safety Act.

b) Fuel cost increased by 2.5 trillion won year on year as the international fuel price rose by 44% for oil, 31% for bituminous coal, and 12% for LNG respectively.

* International fuel price : [Dubai oil] 41$/bbl(2016)→59$/bbl(2017)

[Austrailian bituminous coal] 67$/ton(2016)→88$/ton(2017) [LNG] 10.8 thousand won/GJ(2016)→12.1 thousand won/GJ(2017)

c) Completion of the construction of new generation power plants and transmission and distribution facilities resulted in increase in depreciation cost by 0.8 trillion won.

As stated above, KEPCO's operating profit for 2017 decreased mainly due to factors including increase in international fuel price and reinforced nuclear safety regulations, but KEPCO will put its best efforts to enhance management efficiency and cut down costs.

(in hundred million KRW)