Korea Electric Power Corp. is negotiating a plan to receive five years’ worth of electricity bills in advance from Samsung Electronics and SK hynix. According to a Chosun Ilbo exclusive report on the 3rd, KEPCO proposed an advance-payment system for major power-consuming companies. The advance amount is estimated at around 25 trillion won.
The calculation is based on last year’s payments. Samsung Electronics paid 4.1 trillion won in electricity bills last year, and SK hynix paid 900 billion won. That figure reflects the combined annual total of 5 trillion won for the two companies, multiplied by five years of charges from next year.
The idea is to receive money in advance instead of borrowing.
Under the current system, KEPCO customers can already prepay electricity bills under a deposit arrangement and receive interest. KEPCO is considering creating a special provision to expand that system into a large-scale financing channel for individuals and companies that have used it only on a small scale so far.
The backdrop is KEPCO’s financial condition. Although KEPCO posted operating profit of 4.9 trillion won in the first half of this year, its total debt has reached 211 trillion won. Interest expenses alone in the first half totaled 2.1 trillion won, or about 1.15 billion won per day. Rather than issuing more debt and increasing borrowing, KEPCO is seeking to pull forward stable future revenues.
The money would be used for the power grid. To transmit electricity generated at power plants to factories, new transmission lines and substations must be built. Large projects pursued by KEPCO, including AI data centers and advanced industrial infrastructure, all assume the construction of major power networks. Semiconductor plants, in particular, consume large amounts of electricity, so if the power grid is not installed on time, factory operations themselves can be delayed.
From the companies’ perspective, this would be a trade-off in which they tie up a large sum for five years in exchange for receiving interest. An interest rate higher than market rates would be needed to create an incentive to participate. Both companies posted strong first-half profits this year, so they have funding capacity, but they would still need to weigh the terms against their investment plans.
KEPCO’s financial structure would not fundamentally improve either. Deposits are classified as liabilities in accounting terms. Even if KEPCO receives 25 trillion won in advance, the debt on its books would remain unchanged, and the effect would be limited to having cash immediately available for power grid construction. It is a detour for securing funds without raising electricity rates, but it would also mean that the electricity revenue that would have come in from those companies five years later disappears by that amount.
The fact that the target companies are concentrated in just two firms is also a point of controversy. Depending on whether the system is expanded to other high-power-consuming companies or whether advance-paying firms are given benefits such as priority connection to the power grid, fairness concerns could arise.
KEPCO says discussions are ongoing. It added that specific details such as participation, the interest rate, the advance amount, and the period have not yet been finalized. The outcome of the talks is expected to serve as a barometer for both the pace of power supply to semiconductor clusters and the direction of KEPCO’s financial measures.