[2020 National Audit] Hanwoolwon President: "Board of Audit Also Acknowledges Usage Rate and Sales Price to Some Extent"

22nd Mountain Environment Committee National Audit
Song Gap-seok "Board of Audit did not mention KHN Non-Executive Directors in Written Investigation Report"
Jung Jae-hoon "Heard that from Non-Executive Directors"

Jung Jae-hoon, President of Korea Hydro & Nuclear Power (center), attending the comprehensive audit of the Ministry of Trade, Industry and Energy held on the 22nd at the Industry, Trade, Energy, Small and Medium Venture Business Committee of the National Assembly in Yeouido, Seoul. On the right is Sung Yun-mo, Minister of Trade, Industry and Energy, and on the left is Jung Seung-il, Vice Minister of Trade, Industry and Energy. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chae-seok] "Even looking at the Board of Audit and Inspection's audit report, the utilization rate was said to be almost appropriate. Regarding the sales price, they stepped back by saying 'the previous year's price and the mid-to-long-term price each have their pros and cons.' They also mentioned the need to improve the economic evaluation criteria system because results vary depending on variables. This means they somewhat acknowledged the criteria that the Board of Audit and Inspection considered most important."

Jung Jae-hoon, President of Korea Hydro & Nuclear Power (KHNP), claimed on the 22nd during the National Assembly audit that the Board of Audit and Inspection also somewhat acknowledged the room for disagreement surrounding the utilization rate and sales price, which are the core grounds for the economic evaluation of the early shutdown of Wolseong Unit 1.

Earlier, on the 20th, the Board of Audit and Inspection revealed that the economic feasibility was unreasonably undervalued in the decision-making process for the early shutdown of Wolseong Nuclear Power Plant Unit 1 by KHNP. However, they withheld judgment on the validity of the early shutdown decision.

Song Gap-seok, ruling party secretary of the Industry, Trade, Small and Medium Enterprises Committee (Sanjoongwi) of the Democratic Party of Korea, disclosed that there were facts not recorded in the audit report by the Board of Audit and Inspection.

Rep. Song asked, "In June 2018, the KHNP board agenda stated the break-even utilization rate was 54.4%, but the Board of Audit and Inspection evaluated it as in the low 40% range. What does that mean?"

President Jung replied, "54.4% means that even if it operates only at 54.4%, economic feasibility is secured, and 40% means that even at 40%, economic feasibility exists."

Rep. Song asked, "The Board of Audit and Inspection requested written responses only from the seven non-standing directors among the six standing and seven non-standing directors of KHNP, asking, 'If the break-even utilization rate is presented as in the low 40% range, what decision would you make regarding the early shutdown?' Is that correct?"

President Jung answered, "That's what I heard," adding, "There were many other preconditions as well."

Rep. Song asked, "Among the seven non-standing directors, five responded in writing; four said they would support early shutdown even if the break-even rate dropped to the 40% range, and one refused to answer, saying the question was hypothetical. Is that correct?"

President Jung replied, "Yes, I heard that."

Rep. Song inquired, "When the Board of Audit and Inspection summoned the five for a Q&A audit, among the four who supported early shutdown, three said they would support it as in their written responses, and one said they would reconsider. Is that correct?"

President Jung answered, "Yes. I heard that from the non-standing directors at the board."

Rep. Song asked, "Was this content included in the Board of Audit and Inspection's audit report?"

President Jung replied, "It was not included."

Rep. Song asked President Jung about his impressions of the face-to-face audit by the Board of Audit and Inspection. President Jung said, "I was audited eight times."

President Jung stated, "I agree on three points: that the Board of Audit and Inspection did not conclude on the validity of the early shutdown of Wolseong Unit 1, that breach of trust does not apply to the KHNP directors who made the early shutdown decision, and that although I was given a 'warning,' no one at KHNP was disciplined."

He added, "At the beginning of the audit, there were remarks calling the utilization rate and mid-to-long-term sales price 'nonsense and fraudulent,' but the Board of Audit and Inspection stepped back, saying the utilization rate was almost appropriate and that the previous year's sales price and mid-to-long-term sales price each have pros and cons."

He continued, "The Board of Audit and Inspection said, 'Because results vary too much depending on variables, it would be better to establish economic evaluation criteria through future system improvements,' which means they somewhat acknowledged the utilization rate and sales price, the criteria they considered most important."