Korea Electric Power (NYSE:KEP) reported preliminary consolidated operating income of KRW 4.91 trillion for the first half of 2026, while net income totaled KRW 2.80 trillion, according to management’s second-quarter earnings conference call.
First-half revenue rose 0.3% year over year to KRW 46.32 trillion. Power-sales revenue declined 0.4% to KRW 43.96 trillion, while other revenue, including overseas business revenue, increased 16.7% to KRW 2.35 trillion.
Power Demand and Fuel Trends
Power-sales volume decreased 0.6% from a year earlier to 266.7 terawatt-hours in the first half, which Taeseop Eom, Senior Investor Relation Manager, attributed to lower industrial demand amid an economic slowdown. For the full year, management expects sales volume to increase slightly, citing expectations for higher economic growth and a greater number of operating days.
Management reported that Australian coal averaged about AUD 128.2 per ton during the first half, while JKM liquefied natural gas averaged about KRW 939,000 per ton. The system marginal price, or SMP, averaged roughly KRW 112.3 per kilowatt-hour.
During the question-and-answer session, a company representative said SMP readings in July and August were higher than the comparable periods in 2025. July SMP was around KRW 133 per kilowatt-hour this year, compared with KRW 121 in July 2025. August SMP was about KRW 151 per kilowatt-hour on a year-to-date basis, compared with approximately KRW 117 for the full month a year earlier.
The representative said higher international fuel costs were a main factor behind the increase and noted that a lag exists between movements in fuel markets and their effect on SMP.
Nuclear Generation Outlook
KEPCO said nuclear power’s capacity factor and its contribution to the generation mix declined in the first half. Coal utilization and its generation-mix contribution increased, while LNG’s contribution also rose as overall baseload generation volume declined.
Management expects nuclear generation’s contribution to increase slightly for the full year, coal’s contribution to decrease slightly, and LNG’s contribution to remain broadly stable. It forecast capacity factors in the low-to-mid 80% range for nuclear power, low-to-mid 50% for coal, and low-to-mid 20% for LNG.
Responding to an analyst question regarding the decline in nuclear generation, a company representative said prolonged preventive maintenance at some nuclear units weighed on first-half capacity factors. KEPCO is monitoring the second half closely and plans to add Saeul Unit 3 to the grid, while seeking to conduct maintenance at existing facilities more promptly.
Management later clarified that higher LNG prices related to the Middle East conflict, as well as higher bituminous coal prices, were the principal factors behind coal’s increased contribution to the generation mix.
Costs, Tariffs and Funding
In response to a question on other operating costs, KEPCO said prolonged preventive maintenance at Korea Hydro & Nuclear Power contributed about KRW 101.3 billion in additional other operating expense. It also cited a KRW 70.3 billion increase in material costs at Korea Southern Power related to coal supplied to private operators.
Renewable portfolio standard, or RPS, costs were KRW 2.53 trillion on a consolidated basis and KRW 2.94 trillion on a standalone basis as of the first half. Total borrowings were KRW 133.3 trillion on a consolidated basis and KRW 84.8 trillion on a standalone basis.
Management said it was too early to disclose the financial effect of a potential regionally differentiated electricity-pricing system. It expects a public hearing in the second half, with finalization and introduction anticipated by year-end alongside reforms to regional wholesale power pricing.
On potential tariff increases, management said higher rates would help address accumulated operating losses and support compliance with bond-issuance requirements, though inflation and broader economic conditions must also be considered. KEPCO said it would work with the government toward an appropriate tariff level.
Head of Finance Heung-Bok Oh said the company would make every effort to meet its requirement to bring bond issuance to twice capital by the end of 2027, focusing primarily on improving operating profit generation rather than simply reducing bond issuance.
Regarding potential spending on AI-related projects and grid expansion, Oh said these are mid- to long-term initiatives that would not require the full investment upfront. KEPCO plans to develop a longer-term capital-expenditure plan, spread funding needs across periods, manage available funds strictly and coordinate with government agencies, stakeholders and subsidiaries.
About Korea Electric Power (NYSE:KEP)
Korea Electric Power (KEP) is a South Korea–based integrated electric utility engaged in the generation, transmission and distribution of electricity. The company’s activities span power plant operation and maintenance, grid management, fuel procurement and power trading, as well as engineering, procurement and construction (EPC) services for large-scale power projects. Its asset base includes a mix of thermal, nuclear, hydro and renewable generation capacity, and the company supports system planning and reliability functions for the national electricity network.
In addition to core utility operations, KEP provides a range of technical and consulting services tied to power infrastructure, including plant construction, refurbishment and decommissioning support.
