KEPCO Receives First 'D Grade' in Fiscal Soundness, Performance Bonus '0'

2022 Management Evaluation Results
18 Organizations Rated 'Below Satisfactory' or Lower

Korea Electric Power Corporation (KEPCO), which recorded a large-scale deficit last year, received a poor (D) grade in the management performance evaluation and will not receive performance bonuses. Additionally, six power generation subsidiaries, including Korea Hydro & Nuclear Power (KHNP), Jungbu Power, and Seobu Power, which are closely related to KEPCO's deteriorating financial structure, will have their executives' performance bonuses cut by 50%.

According to the "2022 Public Institution Management Performance Evaluation Results" announced by the Ministry of Economy and Finance on the 16th, KEPCO received a poor (D) grade. This is the first time KEPCO has received a D grade.

The management evaluation grades are rated as Excellent (S), Outstanding (A), Good (B), Average (C), Poor (D), and Very Poor (E). The payment rate of performance bonuses varies depending on the grade, and bonuses are only paid to institutions with an Average (C) grade or higher. KEPCO, which received a D grade this time, will not receive any performance bonuses.

This evaluation reduced the weight of social value (from 25 to 15 points) and increased the weight of financial performance indicators (from 10 to 20 points). The management evaluation grade was largely influenced by financial performance indicators such as operating profit, debt ratio, project expenditure rate, and general administrative expense management. KEPCO's D grade this time reflects its poor financial performance. KEPCO recorded an operating loss of 32.6034 trillion won last year.

KEPCO's deficit is largely due to the inability to raise electricity rates despite the sharp rise in global fuel prices. Regarding this, Choi Sang-dae, Vice Minister of the Ministry of Economy and Finance, said, "The management performance of public institutions involves delays in rate increases and lack of realization, but it can also be seen as a lack of painful efforts by public enterprises," adding, "Giving good evaluations to companies with poor financial management performance does not meet the public's expectations."

Korea Gas Corporation, designated as a financially risky institution last year, received a C grade this time, resulting in a full cut of executives' performance bonuses and a 50% cut for employees in grades 1 and 2.

Similarly, the six power generation companies?Jungbu Power, Seobu Power, Nambu Power, Namdong Power, Dongseo Power, and KHNP?also designated as financially risky institutions and closely related to KEPCO's deteriorating financial structure, will have executives' performance bonuses cut by 50% and employees in grades 1 and 2 cut by 25%.

In particular, the Public Institution Management Committee recommended that KHNP, which recorded a net loss, have its executives first cut 50% of their performance bonuses and then return the remaining balance, and that Nambu Power executives cut 50% of their bonuses and return half of the remaining balance.

On this day, the Public Institution Management Committee recommended dismissal for five heads of institutions (Korea Health Promotion Institute, Construction Machinery Safety Management Institute, Veterans Welfare Medical Corporation, Fire Industry Technology Institute, Energy Technology Evaluation Institute) that received a D grade for two consecutive years or an E grade this year. All five heads were appointed during the Moon Jae-in administration. Among the 14 institutions that received a D grade, excluding those subject to dismissal recommendations, seven heads who had served for more than six months as of the end of last year were issued warnings. Among eight institutions where serious accidents such as fatalities occurred, five heads currently in office, including the Korea Land and Housing Corporation, were also issued warnings.