Korea Electric Power Corporation

Good morning and good evening.

First of all, thank you all for joining this conference call. And now we will begin the conference of the fiscal year 2026 first quarter earnings resulted by Capco. This conference will start with a presentation followed by a divisional Q&A session. If you have a question, please press asterisk 1 on your phone during the Q&A. Now we shall commence the presentation on the fiscal year 2026 first quarter earnings resulted by Capco.

Hello, I'm Jeong-in Yoon, CEO of Korea Power Corporation. I would like to thank all of you for attending Korea Power's 1st Anniversary Performance Announcement Conference Call in 2026. Today's conference call will be conducted in Korean and English, and we will receive a brief performance announcement and then answer questions. Good afternoon. This is Jeong-in Yoon, head of finance and IR team.

I would like to thank you all for participating in today's conference call for the business results for the first quarter of 2026, despite your busy schedules. Today's call will be conducted in both Korean and English. We will begin with a brief presentation on the earnings results, which will be followed by a Q&A session. Please note that the financial information to be disclosed today is preliminary consolidated IFRS figures, and all comparison is on a year-over-year basis, unless stated otherwise. Also, business plans, targets, financial estimates, and other forward-looking statements mentioned today are based on our current targets and forecasts. Please be noted that such statements may involve investment risks and uncertainties. Now, we will begin with an overview of the earnings results for the first quarter of 2026 in Korean, which will then be consecutively translated into English.

In the first quarter of 2026, the operating profit for the first quarter of 2026 was 7,842.3 trillion won. In the first quarter of 2026, the operating profit for the first quarter of 2026 was 7,842.3 trillion won. 24조 3985억원을 기록하였습니다. 이 중 전기 판매 수익은 0.1% 증가한 23조 2233억원, 해외 사업 수익 등 기타 수익은 16% 증가한 1조 1752억원을 기록하였습니다. The export cost and sales cost increased by 0.7%, which is 6,143 billion won. The fuel cost increased by 4.1%, which is 5,2177 billion won. The purchasing power cost decreased by 0.4%, which is 8,7203 billion won. The price-to-price ratio decreased by 0.5%, which is 2,097 billion won. 375,000,000,000,000,000,000,000,000,000,000,000,000 A consolidated operating income in 2026 Q1 stood at $3,784.2 billion won. Revenue increased by 0.7% to $24,398.5 billion won, of which power sales revenue rose by 0.1%,

To 23 trillion 223.3 billion won Overseas business and other revenue increased by 16% to 1 trillion 175.2 billion won Cost of goods sold and SG&A rose by 0.7% to 20 trillion 614.3 billion won Of which fuel cost increased by 4.1% to 5 trillion 217.7 billion won and Purchase Power Cost decreased by 0.4% to $8,720,000,000. Depreciation Expense decreased by 0.5% to $2,937,500,000. Of the non-operating items, Interest Expense decreased by $87,400,000,000 to $1,029,700,000. As a result of the foregoing, the 2026 Q1 consolidated operating income stood at 3,784,000,000,000 won and net income at 2,519,000,000,000 won. Hello, I'm Taeseop Eom, and I'm in charge of the IR.

Next, I would like to talk about the main interests. First, I would like to talk about the performance and prospects of the power sales. Good afternoon. I am Taeseop Eom, Senior IR Manager. I will now go over the main areas of interest, starting with Power Sales Performance and Outlook.

In 2026 Q1, power sales volume decreased by 0.9% YY to 139.7 TWh due to a decrease in industrial demand caused by economic slowdown. In 2026, a higher economic growth rate and number of operating days are expected to slightly raise sales volume.

Next, I would like to talk about fuel price and S&P trend. Next, I will go over the fuel price by fuel source and S&P trend.

In 2026 Q1, for bituminous coal, Australian coal was around $119.9 per ton. JKM LNG was about 890,000 won per ton. S&P was approximately 107.1 won per kilowatt-hour.

In the case of coal, the rate of use has increased due to the decline in the nuclear power supply. The rate of use has increased due to the decline in the nuclear power supply. The rate of use has increased due to the decline in the nuclear power supply. The rate of use has increased due to the decline in the nuclear power supply. The rate of use has increased due to the decline in the nuclear power supply.

Looking at the subsidiary generation mix in Q1, the capacity factor of nuclear power decreased and contribution to the generation mix declined, while for coal, utilization increased and contribution to the generation mix grew as the utilization of nuclear power declined. For LNG, contribution to the generation mix increased as base load generation decreased. In 2026, the contribution of nuclear power should slightly increase, Coal should decrease and LNG should be flat. Also in 2026, the capacity factor of each power source is projected to be mid to high 80% for nuclear, mid to high 40% for coal, and low to mid 20% for LNG.

Lastly, on funding, as of 2026 Q1,

Total borrowings on consolidated basis was $123.2 trillion won and $83.1 trillion won on standalone basis. Now we will move on to the Q&A session. Since we will be conducting the Q&A session with Korean and English consecutive interpretation, please make your questions clear and brief. Thank you.

Now Q&A session will begin.

Please press asterisk 1 if you have any questions. For cancellation, please press asterisk 2 on your phone.

The first question will be given by Pierre Lau from Citibank. Please go ahead.

Hello, management. Good afternoon. This is Pierre Lau from Citibank. I have three questions. The first one is, in view of recent increase in fuel price, what are your latest guidance for your unit coal, LNG, and oil costs in 2026? Secondly, in view of the high fuel prices, what is the economy strategy to apply for terror price? And the first question is, What is the coming update regarding any opportunity to develop a nuclear project in the U.S.? Thank you.

Thank you for the question. There are three questions. First, fuel prices are rising recently. How do you see the outlook for LNG, crude oil, and coal in 2026? Second, in response to these fuel prices, What kind of management strategy do you have in the future? Third, please tell us how the construction opportunities in the U.S. are being developed. I will answer the first question.

To answer your first question regarding the guidelines on the different fuel price outlook that we have, I would like to mention that TEPCO does not

Let me talk about the second situation.

In order to prepare for the rising price of raw materials, which is rising rapidly, we are currently responding to the adjustment of the power mix. We will try to return to the schedule as much as possible as we can now, as we are moving towards the rise in the use rate of raw materials with low cost of raw materials. Regarding your second question on how we are responding to the recent higher fuel cost trends, one main way to address this issue would be to amend the generation mix.

So nuclear power tends to have lower cost. So we have been increasing the utilization of nuclear power plants. We are also trying to recover some of the nuclear power plants that were suspended or were in maintenance and therefore were not in use. So we are trying to bring them back online at the earliest time possible. Also, in Q1, we suspended the cap on thermal power plants for 15 days. So usually during this time of the year, we have caps the limitations on the operations of thermal power plants because they can have impact on the overall micro dust levels in Korea. But we suspended that program for 15 days. And also we are trying to better manage the usage of LNG so that overall cost of power generation can be minimized.

This is the third question. The U.S. government is hoping to cooperate with HANZEN and Team Korea, which has excellent infrastructure construction capabilities under its expansion policy. HANZEN is looking at various ways to participate in the U.S. infrastructure market, and is planning to strategically investigate and promote various risks that exist in U.S. infrastructure projects.

And I will respond to your last question regarding the nuclear power plant opportunities in the U.S. So as you already mentioned, NOCEPCO is driving Team Korea so that we can work together with the U.S. government who has assessed Team Korea to have outstanding construction and build-out capabilities for nuclear power plants. And against this backdrop, we have been exploring the opportunities that are in front of us from multifaceted angles. We are conducting in-depth analysis of the related business risks and of course approaching this in a strategic manner so that this opportunity can bear fruit in the future. Next question, please.

The following question is by Sung Jong-hwa from LS Securities. Please go ahead.

In the third quarter of last year, the YY standard for each quarter dropped sharply, and in the fourth quarter, and especially in the first quarter, there was a lot of mix than expected. Therefore, the first quarter and the second quarter gradually increased, and as you said, if you increase the ratio in the second half of the year, the ratio will increase a little more than last year. I'm more curious about next year than this year, but I heard that the second half of the year will be re-operated in the second half of the year, and in the second half of the year, the second half of the year, Thank you for the opportunity today. My name is Seong Jung-ah from LA Securities, and I have one question regarding the utilization of nuclear power plants. More specifically, I would like to know the outlook of the capacity factor for nuclear power plant next year.

So in your presentation, you mentioned that there will be a slight increase in the capacity factor for nuclear power. And if we look at Q3 and Q4 last year, actually on a YOY basis, the utilization goes down. And Q4 and Q1 2026, I think, show slight increase. You mentioned for the full year, the utilization will be a slight increase. So does that mean that there will be a significant increase of the utilization of nuclear power in the second half Q3, Q4 this year? Because that would mean for the full year, the utilization of nuclear power plant will slightly increase. I am more interested in next year actually because Unit 2 of Gori until Unit 3 and 4 are also expected to come back online second half this year. So, it seems that the utilization of nuclear power will show considerable increase next year. So, what is your guideline on the nuclear power plant utilization for 2027?

Yes, I will answer the question. Currently, Hanseon expects that the use rate of nuclear power will rise slightly due to the recovery of new nuclear power plants in the 3rd and 4th seasons and the recovery of preventive maintenance power plants. Thank you for the question.

In Q3 and Q4, like you've mentioned, there are new power plants coming online and the preventive maintenance that are currently being conducted on some of the units will be completed. So overall, the nuclear power plant capacity factor for this year should show slight increase. However, for 2027, please understand that we cannot disclose specific numbers yet because the preventive maintenance plan has not been confirmed for 2027. There are new power plants coming on There will be preventive maintenance conducted on some of the units, and some of the nuclear power plants will become outdated. And so we need to consider all of these factors before we can disclose and share with you a number for 2026.

Next question, please.

Currently, there are no participants with questions. Please press asterisk 1 to give your question. Once again, if you have a question, please press asterisk and 1.

The following question is by Kim Young-ho from Samsung Securities. Please go ahead.

Thank you for the question. You said that the original usage rate has dropped a little. As far as I know, we saw through the report that the original usage rate at the beginning of the year was about 89% of this year's target. I'm wondering if it's right to say that this is a little bit difficult to achieve. And regarding the original, I think I heard that it's a little bit of a concern about where the handling is better inside and outside, but I'd like to know when this part will be finished and if we do it as a representative, I'd appreciate it if you could share a little bit of what's changed.

Thank you for the opportunity today, and I have two questions. One, there was comment on the decrease of the utilization of nuclear power plants. I think early on this year, KH&P mentioned that their capacity factor target for this year is 89%, so I believe I read this on the news. But if the utilization has gone down, will it still be possible to achieve this target of 89%? And my second question is, Regarding nuclear power plant strategy, I believe currently there is some rule clearing between KHMP and TEPCO, both internally and externally. So when will we have a better idea on who will be the lead in terms of nuclear power plant strategy, and how will that decision impact TEPCO's business strategy and business? Thank you.

Thank you for the question. For your first question regarding whether we can still achieve the

89% utilization target mentioned by THMP for the nuclear power plants. Unfortunately, we are not able to give you a confirmed answer today. Like mentioned earlier, there are many variable factors that impact this number. For example, exactly when the new power plants will come online, exactly when the preventive maintenance will be completed, and when the operations of the specific Nuclear Power Plant will begin. So, unfortunately, we are not able to provide you with an answer to your first question.

I will answer the second question. I understand that the question is related to the original export system. Currently, the current capacity is implemented as a part of the industry in relation to the original export system. The exact announcement schedule has not been announced, And I believe your second question is regarding to the export of nuclear power.

My overall team Korea. So regarding this issue, the Ministry of Trade, Industry and Resources have outsourced the study and I believe the results will be coming in in Q2 around May and June this year. And so once that report comes into the ministry, I believe we will have clear idea on what will happen. Meanwhile, KEPCO has been actively explaining KEPCO's situation and the overall experience of the nuclear power plant exports to the National Assembly and the relevant government agencies. Once the decision is made and the roles and responsibilities become clear, KEPCO will of course be in line with the government decision and make utmost effort to adhere to the national strategy. Thank you.

Next question please.

The following question is by Jo Yoon-haeng from UBS. Please go ahead.

Thank you for the opportunity today. My name is Toyoon Im from UBS, and I have one question regarding the RPS cost.

In your keynote, you mentioned that the RPS cost was 1.2 trillion won consolidated basis. This is around 400 billion won higher on YOY basis. So for the full year, what is your outlook for the RPS cost? Would it be similar? Would this kind of trend continue on for the remainder of the year? Or if I may have the wrong numbers for last year, please let me know. So please elaborate on the RPS cost outlook.

I'd like to answer this question. The REC purchase cost has been improved significantly. Last year, it was 14%, but now it's 15%. The amount of REC purchase cost has increased, and the price has increased significantly, so last year's gas cost was about 3,200 won.

So regarding your question on the REC cost, there was a regulatory change, so the obligation for the renewable energy purchase was raised to 15% from 14%. So this meant that the GENCOs had to purchase RECs from outside, and because there was this very strong demand, The unit cost in the market went up. So on a worldwide basis, there was a 425 billion won increase in the RPS cost. However, for the whole year guidance, it is a difficult number to predict. So unfortunately, we are not able to provide you with the numerical outlook. Thank you.

Next question, please.

The following question will be given by Hwang Sung-hyun from Yujin Investment Securities. Please go ahead. Hello. I think there was a talk about S&P 500. In the second half of the year,

Good afternoon. I have a question regarding the talks of government imposing a ceiling on S&P.

I think those talks have largely subsided recently, but is there a possibility that this may be introduced in the second half? And my second question is related to other changes in the overall electricity purchasing and providing system. So there are also talks about different regional differentiated tariff scheme and so on. So what would be the progress on these discussions as well?

Yes, to answer your first question, as for the S&P ceiling program, we have not received or have been approached by the government on the introduction of such system.

In the second phase of the market system reform, I understand and answer that you are talking about regional incentives. Currently, the research area for the introduction is under construction, and we expect the results to come out in the first half of the year. So, in the second half of the year, we have a plan to secure regional incentives related to government charges and opinions of stakeholders. However, this plan can be changed.

And I believe your second question was largely related to the regional differentiated tariff scheme and market reform. So currently, the government has outsourced a study on this, and we expect the study to be completed around first half of this year. And there are active discussions being held among government-related stakeholders and the public as well. I think we will have a better idea on the actual design of this regional differentiated tariff scheme towards the second half of this year. However, the timeline has not been confirmed. Next question, please.

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The following question is by Kim Young-ho from Samsung Securities. Please go ahead.

Since there are no one else lining up to ask questions, I'd just like to ask one more question.

So I know that the seasonal differentiated tariffs and the tariffs that differentiate time intervals have been introduced. I know these are new systems, but are you seeing any visible impact to your financials and overall business?

Yes, I would like to talk about the influence of the fiscal year on the fiscal year on the fiscal year. The fiscal year on the fiscal year on the fiscal year is based on the fiscal year Since we started implementing it, it hasn't been a month yet, so it's too early for us to analyze the impact, but the result of the simulation we did before the start is that 97% of the industrial cost is expected to have a negative effect on the maintenance fee. From June 1, it is expected to be implemented by other contracts such as general cost and other contracts, and it seems that it will be possible to analyze the impact by the end of next year or this year.

Yes, so the new differentiating time tariff scheme has been introduced on the 16th of April only for industrial power. So it hasn't been very long, less than a month. So it is a little too early to talk about the impact. But according to the simulation we conducted before the system was introduced, around 97% experienced or said they expect a reduction in their overall Let me give you a quick answer.

Yes, but just to give you a little bit more color, I think the overall impact will be minimal because we are trying to redirect the traffic of power usage

So this means that the peak load will go down, whereas the lowest load levels will go up compared to current practices. So we are trying to change the overall consumption and load pattern to enhance the efficiency of providing power. So that will be the main objective. So that was just to give a little bit more color on the purpose of the system. Thank you.

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Once again, if you have a question, please press Ask RISC-I. As there are no further inquiries, we will now end the Q&A session. For any additional inquiries, please contact our IR department. This concludes the fiscal year 2026 first quarter earnings resulted by CAPCO. Thanks for the participation.