Samsung Electronics and SK hynix have told Korea Electric Power Corp. that they cannot join a plan to prepay their electricity bills. Under the proposal, KEPCO would collect 25 trillion won in electricity charges covering the next five years upfront and spend the money on building out the power grid, an urgent need created by expanding investment in semiconductors and artificial intelligence. The companies turned it down, citing the medium- to long-term financial burden. KEPCO had offered to add interest at a mid-3% annual rate to the prepaid amount and deduct it from future bills. But there is no guarantee the chip boom will last all five years, and the companies must commit to large investments at the right moment. Being asked to pay 20 trillion won in the case of Samsung Electronics and 5 trillion won in the case of SK hynix, all at once, appears to have been more than they were willing to accept.
The proposal, which was backed even by bills revising the Electric Utility Act and the KEPCO Act submitted by ruling party lawmakers, stems from the utility's severe financial distress. As of the end of June this year, its debt stood at 210.7 trillion won and its borrowings at 133 trillion won, with interest costs alone reaching 11.5 billion won a day. This is the cumulative result of an electricity pricing policy that failed to properly reflect costs, along with the burden of renewable energy investment. Investment needs, meanwhile, are surging. KEPCO plans to spend 72.8 trillion won on transmission and substation facilities through 2038, but some projections put the requirement as high as 124 trillion won once three mega projects are included. If the special exemption that expanded its corporate bond issuance ceiling expires at the end of next year, even fundraising could become difficult. Prepaid electricity bills were meant to ease KEPCO's financial burden, but they are a stopgap that cannot serve as a fundamental remedy.
Building core infrastructure such as the power grid is a responsibility of the state and its public enterprises. KEPCO's losses are national debt in the broad sense, and they cannot be pushed onto the private sector. Concentrating prepayment of grid construction costs on a handful of companies also violates the principle that burden should follow responsibility. Improving KEPCO's financial structure must come first. The government must normalize an electricity pricing system that has been held down by political considerations, overhaul inefficient operations and cost structures, and move quickly to restructure the power industry. If it again extends only the special exemption on KEPCO bond issuance while ignoring realistic pricing out of concern for the 2028 general election, the losses will only grow. Amid U.S.-China trade friction and the realignment of global supply chains, chipmakers are competing in an environment where they can barely see one step ahead. Their profits should go toward future investment, including technology development and capacity expansion. The idea of offloading a public utility's losses onto a semiconductor boom should be abandoned.
