A government plan to simplify the household power bills has taken heavy toll on state-run Korea Electric Power Corp. (KEPCO) as cuts in the bills are expected to wipe out nearly $900 million income for the utility firm.

KEPCO stocks closed Monday at 41,800 won, down 33 percent from 62,600 won, last year’s highest mark in May. They finisied at 41,150 won on Tuesday, down 1.56 percent or 650 won.

The fall in its shares accelerated after the Ministry of Trade, Industry and Energy confirmed in December a plan to overhaul the household utility billing system that would translate into a 11.6 percent cut in annual bills. This could lead to about 1 trillion won ($870 million) reduced profit for KEPCO starting this year.

Worse yet, the energy price showing sign of an upturn will likely add woes to the state-owned utility company. Fuel prices are expected to rebound this year after having fallen since 2013. “The unit price of coal would rise from 105,000 won per ton last year to 113,000 won this year,” said Ryu Je-hyun, an analyst at Mirae Asset Daewoo Securities Co.

Despite the expected rise in fuel prices, KEPCO that is expected to record more than 10 trillion won in operating profit a year has no excuse to raise electricity bills in the near future. Shares of KEPCO without any near-term catalysts will likely remain weak for a while.

The government’s move to strengthen environmental regulations has been driving down the stocks of KEPCO’s subsidiaries as well. KEPCO Plant Service & Engineering Co. (KEPCO KPS), a power plant maintenance unit, saw its shares plummeting by 44 percent from a 52-week high of 96,300 won recorded in February 2016 to close at 54,000 won in Seoul trading on Monday. The fall is largely attributed to its decreased operating profit from 175.2 billion won in 2015 to 105.8 billion won last year.

Shares of KEPCO Engineering & Construction Co. (KEPCO E&C), a nuclear power plant developing unit, finished at 25,900 won on Monday, down 27 percent from its 52-week high of 35,500 won in August last year. Its stocks have been dragged down amid mounting pressure to reduce the number of nuclear power plants due to environmental concerns.

By Hong Jang-won

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