State utility Korea Electric Power Corp. (KEPCO) sank deeper in the red, ending June in losses for the third straight quarter - its longest loss streak in six years - as its profitability suffered from the government’s policy to phase out of nuclear- and fossil-fueled power to shift towards more environment-friendly energy sources.

The utility firm said in a regulatory filing on Monday its operating loss for the April-June period was 687.1 billion won ($605.9 million), widening from the 127.6 billion won loss last quarter and 129.4 billion won loss in the fourth quarter of 2017.

For the first six months, consolidated operating loss reached 814.7 billion, sharply reversing from a profit of 2.3 trillion won in the same period last year.

Revenue for the second quarter totaled 13.3 trillion won, up 3.2 percent on year but down 15.1 percent from the previous quarter. Its bottom line also swung to a loss of 918.6 billion won from a profit of 358.9 billion won a year ago and widening from the loss of 250.5 billion won in the first quarter.

On Tuesday, KEPCO shares finished 2.57 percent lower at 30,350 won.

Higher imported fuel costs and less reliance on nuclear reactors hammered the company’s financial statement.

The operation rate of nuclear reactors slipped to 58.8 percent by the end of June from 74.7 percent a year ago. The state utility produces electricity mostly from nuclear reactors and coal-powered generators. Under the liberal government’s policy to wean the country off nuclear and fossil-fueled power, the firm instead had to buy costlier power from LNG-fueled generators run by the private sector. Power purchase from subsidiaries also increased by more than 2 trillion won in the first half from the year-ago period.

Higher imported fuel costs also hurt its bottom line.

In the first half of the year, oil prices surged more than 33 percent on year and prices of bituminous coal - a common coal type used in Korean thermoelectric power plants - jumped 28 percent. KEPCO owns six generation subsidiaries and their fuel costs account for 32.5 percent of the parent company’s total operating expenses.

KEPCO’s consolidated net loss in the first six months of the year ballooned to 1.17 trillion won, eclipsing the 814.7 billion won operating loss in the first half due to widening losses at Korea Hydro & Nuclear Power Co., which recently footed a 560-billion-won bill to retire the first unit of the Wolsong nuclear power plant ahead of its license expiration in 2022.

Kim Jong-kap, who took over as KEPCO’s new chief executive in April, has been pursuing a rigorous restructuring to return the company to profitability in the latter half. He has pushed forward a 1.1 trillion won rationalization scheme to cut costs and streamline operations and plans to raise cash by selling off non-core real estate assets.

But analysts are doubtful of any improvement in the near future as the government has demanded a temporary cut in residential electricity charges for the peak summer period to lessen the burden on households during Korea’s hottest summer in 111 years.

By Ko Jae-man and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]