KEPCO proposes 25 trillion won prepayment to Samsung, Hynix

This proposal was initiated with the aim of simultaneously addressing KEPCO's severe financial difficulties and securing large-scale transmission network investment funds for the creation of semiconductor clusters.

Concerns about potential significant disruption to the bond market from large-scale KEPCO bond issuances were also reflected.

In 2022, KEPCO recorded a massive deficit of 34 trillion won and issued an enormous amount of KEPCO bonds to raise funds. At that time, KEPCO bonds had the effect of pushing up interest rates across the entire bond market.

As interest rates on KEPCO bonds surged, corporate bond interest rates also rose in tandem. This led to increased fundraising costs for companies.

In particular, this coincided with the Legoland crisis in 2022, further tightening companies' fundraising environment. The negative impact of massive KEPCO bond issuance on the financial market has thus already been experienced.

Reporter Kim Sang-hoon explained the situation at the time, stating, "At that time, KEPCO bonds had the effect of sharply raising interest rates across the entire bond market."

The total outstanding balance of corporate bonds exceeds 81 trillion won.

Although KEPCO has recorded a surplus of about 10 trillion won over the past 2.5 years, some point out that this level of surplus is far from sufficient to repay its enormous debt.

The additional supply of approximately 20 trillion won worth of highly rated KEPCO bonds to the bond market had a significant impact on the market.

As a large quantity of highly rated bonds were released, investors flocked to KEPCO bonds instead of relatively lower-rated general bonds. This caused a decline in the price of general bonds and an increase in interest rates, leading to overall instability in the bond market.

Reporter Kim Sang-hoon emphasized the uniqueness of the issuance volume, stating, "In 2022, it was 31.8 trillion won. It was exceptionally massive. So, about 20 trillion won of high-credit-rating bonds like KEPCO's were additionally released into the bond market."

This means that based on the assumption that approximately 1.4 trillion won in transmission network facility construction costs are incurred per 1GW, the investment costs also increased proportionally to the increased electricity demand.

The 12th Transmission and Transformation Plan, currently being developed, is expected to include three major projects, including the Honam semiconductor cluster. This is projected to significantly increase target electricity demand to approximately 165GW by 2040.

This represents an additional 35.7GW compared to the target demand of the 11th plan. To accommodate this additional demand, an estimated 50 trillion won in additional costs will be incurred, on top of the existing 72 trillion won investment.

Reporter Kim Sang-hoon explained the basis for the additional costs, stating, "We are currently creating the 12th plan. Since it includes three mega projects, the target demand is expected to increase to approximately 165GW by 2040. That's an additional 35.7GW compared to the 11th plan. So, the calculation shows that an additional 50 trillion won beyond 72 trillion won will be needed."

There are serious concerns that if KEPCO issues additional bonds to secure massive transmission network investment funds, the bond market interest rate increases and financial market shocks witnessed in 2022 could recur. To alleviate this burden, KEPCO proposed electricity bill prepayment to large power-consuming companies such as Samsung Electronics and SK Hynix.

This proposal is evaluated as an unconventional solution to mitigate market shock by directly raising funds from companies instead of issuing KEPCO bonds. Reporter Kim Sang-hoon explained, "Since it's a burden, Samsung, Hynix, you just prepay. Instead of KEPCO issuing bonds. So this is an unconventional solution."

Efforts to establish a legal basis for the electricity bill prepayment system have also begun. On April 30, Representative Park Jeong's office of the Democratic Party of Korea introduced an amendment to the Electric Utility Act.

This amendment allows for electricity bills to be prepaid for up to five years. It also includes a plan to reduce the burden on companies by stipulating that interest at the level of government bond rates be paid on the prepaid amount.

Reporter Kim Sang-hoon announced the bill's introduction, stating, "On April 30, Representative Park Jeong's office of the Democratic Party of Korea introduced an amendment to the Electric Utility Act. It allows prepayment for up to five years."

However, from the companies' perspective, they are moving into the semiconductor cluster, a key national industry, at the government's request and policy judgment. There are many complex factors involved that make it difficult to simply apply the beneficiary pays principle, and the controversy continues.

Similar discussions are ongoing in the United States. In March 2026, the White House signed a 'Ratepayer Protection Pledge' with seven big tech companies, including Google, Microsoft, Amazon, Meta, Oracle, OpenAI, and XAI.

This pledge specifies the principle of addressing new electricity demand and burdening the original cause with transmission network construction costs. This movement reflects a shared understanding that large electricity consumers, such as data centers, should share the costs of power grid investment.

Reporter Kim Sang-hoon revealed the signing of the pledge, stating, "In March 2026, the White House signed something called the Ratepayer Protection Pledge with seven companies: Google, Microsoft, Amazon, Meta, Oracle, OpenAI, and XAI."

In Virginia, a specific order was issued regarding the transfer of transmission network investment costs, as seen in the Dominion Energy case. Virginia ordered that transmission network costs not be passed on to residential electricity bills, but instead frozen and all costs imposed on data centers.

Going further, Virginia established a new category called 'Mandatory Construction Contribution.' This is an order compelling data centers to prepay for power grid construction costs.

Reporter Kim Sang-hoon explained the situation at the time, stating, "Don't pass on a single penny to residential users. Residential rates are frozen, and all these costs are to be imposed on data centers, and going one step further, they created this category called 'Mandatory Construction Contribution.' It was an order to pay everything upfront."

Microsoft claims that while it signed the federal government's Ratepayer Protection Pledge, it had no intention of prepaying for power grid construction costs.

This illustrates a legal disagreement over the scope and interpretation between the federal government's pledge and the state government's construction contribution order.

Reporter Kim Sang-hoon explained the background of the appeal, stating, "Microsoft took this administrative order to the state Supreme Court. They appealed, saying 'Let's discuss this in court. We signed the Ratepayer Protection Pledge with the federal government, the White House, but we had no intention of paying upfront.'"

The U.S. Congress has also begun legislative work related to the burden of transmission network costs. This move aims to complement the limitations of the White House's Ratepayer Protection Pledge, which has weak legal enforceability.

The purpose is to clarify the 'cost causation' principle by legally mandating the burgeoning electricity demand in the AI era and the associated transmission network costs.

If KEPCO issues large-scale KEPCO bonds to secure massive investment funds, this could lead to rising corporate bond interest rates, increasing companies' fundraising costs and causing a shock to the overall financial market.

To avoid this situation, KEPCO requested Samsung Electronics and SK Hynix to prepay their electricity bills. If companies prepay, KEPCO can reduce its KEPCO bond issuance, and discussions are underway for companies to receive interest (plus alpha) at the level of government bond rates.

Reporter Kim Sang-hoon emphasized the spirit of mutual benefit, saying, "If we issue KEPCO bonds, it's bad for you, bad for me, bad for all of Korea. So why don't you prepay what you're going to pay anyway? We'll give you government bond interest plus alpha?"

This proposal contains a complex intention to simultaneously solve two urgent tasks: KEPCO's financial difficulties and the expansion of the national power grid.

The MOEF's primary goal is to maintain a stable bond market.

Fearing the adverse effects of large-scale KEPCO bond issuance on the bond market, the MOEF is actively demonstrating its willingness to resolve this issue. The aim is to prevent a general rise in corporate fundraising interest rates by curbing KEPCO bond issuance.

Reporter Kim Sang-hoon explained the MOEF's leading role, stating, "From the perspective of the MOEF, which observes the bond market, the side effects would be too great, so there are no worries. When raising funds, if you touch the bond market, overall fundraising interest rates rise."