Inside the generation subsidiaries of Korea Electric Power Corporation, complaints are emerging about paying tens of billions of won in contributions every year to the Korea Institute of Energy Technology (formerly KEPCO Institute of Technology). The five subsidiaries—Korea Western Power (KOWEPO), Korea Southern Power (KOSPO), Korea South-East Power (KOEN), Korea Midland Power (KOMIPO), and Korea East-West Power (EWP)—say their financial burden is growing because of the contributions to the Korea Institute of Energy Technology at a time when their recent results are weak.
According to the energy industry on the 1st, at a Korea Midland Power board meeting held late last year, the contribution paid to the Korea Institute of Energy Technology was put on the chopping block. Last year, Korea Midland Power granted 3.585 billion won to the Korea Institute of Energy Technology, and it is said to be planning to pay a similar amount this year.
At the time, one attendee at the board meeting said, "It is regrettable that we must keep paying the share even though this year's financial outlook is poor and we cannot increase the welfare budget for employees." The attendee also pointed out that there is no clear deadline for how long the generation company has to keep paying.
Located in Naju, South Jeolla, the Korea Institute of Energy Technology is an energy-specialized university under the Ministry of Climate, Energy and Environment. The establishment of the university was included among 100 key national tasks of former President Moon Jae-in, who took office in 2017. KEPCO, its affiliates, the government, and local governments granted funds, and the school opened in 2022.
Every year, between 110 billion won and 200 billion won in support funds are injected into the Korea Institute of Energy Technology, with KEPCO and its affiliates paying the most. Of the total contributions of 111.7 billion won last year, 71.7 billion won came from KEPCO and its affiliates. Looking only at the contributions from KEPCO and its affiliates, KEPCO pays 60%–70%, and the six subsidiaries (the five generation companies and Korea Hydro & Nuclear Power Co. (KHNP)) split the rest.
The cumulative amount granted by KEPCO and its affiliates so far is estimated at more than 370 billion won. This year as well, KEPCO and its subsidiaries are expected to pay more than 70 billion won in support funds to the Korea Institute of Energy Technology.
Although they will not say so openly, the five generation companies, whose recent results have deteriorated, say contributions to the Korea Institute of Energy Technology are a burden. Profitability is falling as the system marginal price (SMP), the price at which they sell electricity to KEPCO, has dropped significantly. On top of that, they must reduce the utilization rate of coal-fired power plants while increasing investment in renewable energy, which has also increased their financial burden.
Under the original agreement, support from KEPCO and its subsidiaries for the Korea Institute of Energy Technology was to end last year. The government, KEPCO, and others are currently discussing the deadline for subsidiaries' contributions, and it is said there is a high chance of an extension. The government has said it will inject 1.6 trillion won into the Korea Institute of Energy Technology by 2031.
An official at one generation subsidiary said, "In fact, the Korea Institute of Energy Technology has nothing to do with our company," adding, "One person from a generation company sits on the school's board, but we are told that even if complaints from the generation companies are compiled and raised at the board, nothing changes."
Some argue that electricity bills paid by the public are granting special favors to the Korea Institute of Energy Technology, and say the university's operating method or funding structure should be changed. The favoritism controversy arose as the government used the Electric Power Industry Basis Fund, created from 3.7% of electricity rates, for this school.
A professor in the energy department at a private university said, "The Korea Institute of Energy Technology gives students full scholarships, and professors' annual salaries are also high," adding, "There is no end to criticism that its operations are lax because it receives more financial support than several national universities."
The Ministry of Climate, Energy and Environment drew a line, calling such complaints a minority view within the board. A ministry official said, "In 2023, KEPCO's severe operating deficits and cuts in government contributions delayed the school's construction, which resumed this year," adding, "There is still a lot of construction left, and as originally intended, state-run power companies must continue to pay." The official added, "How the Korea Institute of Energy Technology will be run going forward is an area where multiple stakeholders must pool their wisdom."