From left: The flag of Samsung Electronics at the company's office in Seocho District, southern Seoul; the logo of SK hynix outside the company's headquarters in Icheon, GyeonggiYONHAP
Korea Electric Power Corporation (Kepco) has proposed that Samsung Electronics and SK hynix prepay a combined 25 trillion won ($18.4 billion) in electricity bills for the next five years so that the funds can be used to build power grids for semiconductor clusters.
Under Kepco’s proposal, Samsung Electronics would prepay 20 trillion won, and SK hynix would prepay 5 trillion won. The two companies are currently considering the proposal, industry sources said.
The proposed amount was calculated on the assumption that the companies’ annual electricity bills from 2027 to 2031 would remain similar to last year’s, when Samsung Electronics paid 4.1 trillion won in electricity bills and SK hynix 900 billion.
Kepco customers can pay their electricity bills in advance and receive interest on that amount. But the electric utility is considering introducing special provisions that would allow it to use the prepay system to raise large amounts of capital.
The state-run power company has reportedly offered Samsung Electronics and SK hynix an interest rate higher than the yield on two-year government bonds, with the option to pay the interest in electricity bill discounts every six months rather than in cash being discussed.
Kepco confirmed that it had made the offer but said specific details — including whether the companies would agree, the interest rate, the amount to be prepaid and the prepayment period — have yet to be finalized.
The utility’s deteriorating finances are likely one reason behind the proposal. Its debt stood at 210.7 trillion won as of the end of June, with interest expenses alone amounting to about 11.5 billion won per day.
Korea Electric Power Corporation's headquarters in Naju, South Jeolla, in May 2023YONHAP
The advance payments could be a win-win arrangement.
“A large-scale electricity bill prepayment system would allow companies that urgently need expanded power grids and Kepco, which needs funds for investment, to complement each other’s needs,” a Kepco official told the JoongAng Ilbo. “Kepco would be able to secure large-scale investment funds […] and participating companies would earn stable returns on a risk-free asset and help ensure that their new factories can begin operations on schedule.”
Kepco reportedly plans to use the advance payments from Samsung Electronics and SK hynix to finance the construction of power grids for semiconductor clusters in Yongin, Gyeonggi and the southwestern Honam region, which encompasses the Jeolla provinces and Gwangju.
Ruling Democratic Party Rep. Park Jeung also proposed an electricity bill prepayment system during a forum on expanding investment in power infrastructure on Wednesday.
Rep. Park suggested a system under which companies that consume large amounts of electricity would prepay three to five years of electricity bills, which Kepco would use to invest in national power infrastructure such as transmission grids and substations.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
