Thanks to a large drop in fuel prices…Sales recorded 58.6 trillion won
Evaluation of “The result of efforts to promote management efficiency of electric power group companies”
[에너지신문] KEPCO’s operating profit surpassed 4 trillion won last year and succeeded in turning to the black. It is an evaluation that the widening range of the decline in fuel prices was effective.
On the 19th, KEPCO announced that it achieved consolidated sales of 5.8 trillion won and operating profit of 4.4 trillion won in 2020.
According to KEPCO, fuel costs for power generation subsidiaries and electricity purchase costs for private power generation companies decreased by about 6 trillion won due to the continued decline in fuel prices such as oil prices. Subsidiary fuel costs decreased by 3.5 trillion won compared to the previous year, and electricity purchase costs decreased by 2.5 trillion won compared to the previous year, despite a 2.0% increase in purchases from private power generators.
On the other hand, due to the corona 19 and the prolonged rainy season, electricity sales revenue decreased by 200 billion won, and other revenues decreased by 400 billion won as the overseas construction sector was almost completed. As a result, operating profit increased by KRW 5.400 trillion from the previous year to KRW 4.4 trillion.
An official from KEPCO explained, “Operating performance is more affected by international fuel price fluctuations such as oil prices than nuclear power and coal utilization, but fuel cost fluctuations are periodically reflected in electricity rates with the implementation of the cost-linked rate system from this year.”
■ Achievements of joint management efficiency promotion with electric power group companies
KEPCO and Electric Power Group companies made efforts to reduce the cost of electricity supply, which is about 37% of operating expenses, apart from fuel costs and electricity purchase costs, which are affected by international fuel price fluctuations, resulting in cost savings of about 470 billion won. Electricity supply costs consist of facility management costs, depreciation costs, labor costs, sales and management costs, etc., and are approximately 20 trillion won per year (provisional in 2020).
Specific cost reduction efforts include: △Efficient management of facilities using new technology and minimization of commissioned work using internal personnel △Reduction of facility repair costs, such as applying different parts in terms of service life, △Establishment of strict corporate-wide cost execution standards, such as improving management standards for construction units.
In the last five years (2015-2020), the rate of increase in power supply costs was 5.9%, and when this ratio was applied, an increase of about 1.15 trillion won was expected in 2020. Suppressed within the increase.
In addition, interest expenses were reduced by KRW 51.4 billion (2.5% ↓) compared to the previous year by finding new low-interest borrowers and strengthening the management of borrowings, along with reducing power supply costs.
■ Continued promotion of high-strength management efficiency this year
KEPCO and the Electric Power Group companies plan to reduce power supply costs through management efficiency along with the reorganization of the electricity rate system, minimize the factors for raising electricity rates, and continue to promote profit improvement efforts.
In the future, KEPCO and electric power group companies set a goal to manage the increase rate of electricity supply cost (cost per unit) per 1kWh of sales to within 3% per year by 2024. To this end, KEPCO’s own’Power Supply Cost TF’ has been established since the beginning of this year, and has been continuously pursuing improving the efficiency of power supply cost execution and improving profits by focusing on financial issues and responding.
KEPCO expands this to power generation subsidiaries, organizes a consultative body with power group companies to manage power supply costs in the power generation sector, and shares efficiency goals to regularly check performance, and through the’Management Innovation Committee’ where external experts participate, KEPCO and power group companies It plans to systematize execution performance checks, such as joint monitoring of efforts to reduce overall power supply costs.
An official from KEPCO said, “We plan to continuously promote network investment to expand new and renewable energy and implement carbon neutrality, develop low-carbon and eco-friendly overseas business, and accelerate ESG management, such as financing for expansion of new and renewable investment.”
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