Heat wave boosts profits of coal-fired power plants

Five Korean coal-fired power plants operated by a state-run company have seen a sharp rise in their profitability amid the weeks-long heatwave, data showed Monday.

According to the Financial Supervisory Service and power industry sources, the five coal-powered plants run by Korea Electronic Power Corp. recorded profit rates – operating profit as a proportion of total sales -- of about 15 percent to 22.5 percent from January to June this year. 

Korea East-West Power saw the highest increase to 22.5 percent, which is 9 percentage points higher than last year.

Korea South-East Power and Korea Western Power saw their profit rates rise to 20 percent.

Korea Southern Power and Korea Midland Power, whose profit rates had been around 5 percent, saw a surge to 16.5 percent and 14.9 percent, respectively.

KEPCO, which purchases the power from those five companies and sells it to customers, also saw a 46 percent rise in its operating profit to 6.4 trillion won ($5.7 billion). This is equivalent to earning 34.7 billion won a day in the first half of this year.

KEPCO hit the record high operating profit last year of over 11 trillion won. The state-run company is projected to break the record again this year, thanks to plummeting wholesale prices of power and rising demand.

The wholesale price of the power hit a record low of 65.31 won per kilowatt-hour in June, the lowest point in seven years.

The sweltering heat that started early, in May also contributed to the demand increase.

Seoul City saw temperatures hit 37 degrees Celsius on Monday, the highest in 22 years. The Korea Meteorological Administration forecasted that the heat wave would continue until the end of this month.

Amid the heat wave and rising profitability of power companies, public voices have grown over reforming the current power bill system that only charges cumulative bills to households.

The industry sector and self-employed businessmen are exempt from the cumulative charge system despite the high demand.

As the public demand escalated earlier this month, the government and ruling Saenuri Party set up a task force to draw measures of revising the electricity bill system.

By Lee Hyun-jeong  (rene@heraldcorp.com)