03.11.2020 Author: Konstantin Asmolov

What is Wrong with the Wolseong-1 Reactor?


This author has written more than once about how South Korean President Moon Jae-in struggles with his nuclear power industry and its consequences. Today’s article will tackle how this is done, and in this regard, another political scandal that has occurred in South Korea?

It concerns the Wolseong-1 nuclear reactor with a capacity of 679 megawatts (which is about 0.6% of the total electricity supply), one of the oldest in Korea.  Operation of the Wolseong-1 nuclear power plant began on April 22, 1983, and its initial service life ended in 2012, but in 2015 the Nuclear Safety Commission decided to extend its operation until 2022. To expand the reactor’s life, Korea Hydro & Nuclear Power (KHNP) has spent up to 700 billion won (approximately $ 480-580 million) to strengthen its safety.

However, among Moon’s political promises was the closure of the reactor, located in the city of Gyeongju of North Gyeongsang Province, his political opponents’ electoral base. In general, according to Moon’s plans, 11 of the twenty-four currently operating reactors are planned to be decommissioned by 2030. That’s why back in 2018, the Korean Nuclear Safety Commission raised the issue of closing the nuclear power plant due to the economic impracticability of its further use following the government’s policy of increasing the share of renewable energy sources and reducing dependence on nuclear energy.

This caused a fierce debate between supporters and opponents of the nuclear power plant, but in June 2019, KHNP decided to close the reactor due to low payback against the backdrop of rising maintenance costs. However, as was noted at the time, the decision to close Wolseong-1 may be revoked by the Board of Audit and Inspection (BAI) of the Republic of Korea if it turns out that the analysis of the economic efficiency of the reactor was not carried out thoroughly enough.

It turned out that KHNP did not conduct a full study of the reactor and that the original 50-page report turned into a two-page summary for the Board of Directors, which was also subject to editing. One of the earlier versions said that the reactor is well maintained and in working order. The revised version said the opposite, and estimates of the economic value of the plant were changed.

The BAI investigation was also questionable. After KHNP failed to submit the necessary files, BAI had to use digital forensics to recover deleted files from KHNP’s computers, which seemed to have something to hide.

The BAI attempted to complete its report just before the April 15 General election. In June, the BAI’s statement was still not ready, and the media began to push it.  At the center of the controversy was a KHNP report that the reactor was not economically viable. The reactor operator has faced accusations that it manipulated profit-related figures to support the Moon Jae-in administration’s policy of phasing out nuclear power plants. KHNP was suspected of recklessly reducing its expected profit from 370 billion won to 22.4 billion won.

The last hearings were held on October 13, and rumors spread around the country that approximately 70-80 percent of the unpublished report was filled with arguments in favor of nuclear power. Opposition lawmakers added that the early closure of the reactor raised electricity tariffs by 851 billion won, as nuclear power is still the cheapest.

Adding fuel to the fire was Cho Sung-Jin, Professor of energy at Kyungsung University, and a former Board member of KHNP, who publicly criticized the company’s management, saying the decision to close the reactor was made without careful due diligence on the part of the Board of Directors. He also claimed that the minutes of Board meetings submitted to Parliament were forged. The government said it had not exerted any pressure.

On October 15, it was announced that the audit is almost complete, and the final document will be released in the coming days.

But more interesting was Choi’s reaction to the question about the reasons for the delay: “The case is not as clear as it may seem from the outside. Several complex issues are also intertwined in this case.” Choi bluntly said that the review met with severe resistance from the government officials involved.

On October 20, the audit was published. The rumors turned out to be true – the main conclusion of the audit was that when deciding to terminate the operation of the Wolseong nuclear power plant’s first power unit, the economic feasibility of its further process was unreasonably underestimated.

The main details were as follows:

  • Data on electricity sales that appeared in a June 2018 report commissioned by KHNP, a third-party accounting firm, was deliberately understated. KHNP employees were aware of this but allowed the accounting firm to continue the survey as it was.
  • Officials from the Ministry of Trade, Industry, and Energy, which oversees KHNP, were involved in the decision-making process, “engaging themselves in an economic assessment to tilt the results in favor of closing the reactor.”
  • If the revenue from the power unit’s operation was underestimated, the amount of cost reduction after the shutdown of the nuclear power plant is overstated. In March 2018, KHNP reported that the reactor’s immediate decommissioning would save 170 billion won compared to its continued operation’s financial performance.
  • Problems with calculating electricity prices, wages, and repair costs were also mentioned.
  • The company’s management switched to manipulating the expected profit figures after it found no safety problems due to the long-term operation of the reactor.

In general, BAI questioned the overall reliability of the reactor’s economic performance calculation process, singling out Baek Woon-kyu, former Minister of Trade, Industry, and Energy, as one of the leading figures responsible for the misjudgment. Baek either knew about involvement of officials’ from his Ministry or willingly allowed them to interfere in the evaluation process.

The Bureau did not risk going entirely against the party line and laid straw on the ground, honestly noting that they only considered the reactor’s economic viability and not, say, public reaction or nuclear safety issues. As pointed out in the South Korean media, although the Board of Audit and Inspection (BAI) could not decide whether a premature shutdown was appropriate, its conclusion that the reactor’s economic viability was unreasonably underestimated may be sufficient reason to cancel this decision.

Political forces interpreted the Bureau’s report in different ways.  The ruling Democratic Party of Korea said its outcome shows that the phase-out scheme is going in the right direction, despite some procedural problems. The conservative opposition – that the economic feasibility assessment of the reactor was fabricated, and the decision to close it is politically motivated in favor of Moon Jae-in’s energy policy. Korea Hydro & Nuclear power (KHNP) managers and officials of the Ministry of Trade, Industry, and Energy should be held accountable for the erroneous decision.

Moreover, on October 21, the main opposition party of South Korea, the People Power Party, said it would bring criminal charges against those involved in the controversial early closure of the nuclear power plant and alleged obstruction of a state audit. According to the leader of the Parliament’s main opposition, Joo Ho-young, this will apply to officials who “obstructed verification in the process of unfair closure, abused their powers and destroyed official papers.” According to him, the number of destroyed documents was 444, and it all started with Moon’s remark to his assistants, “when will Wolseong finally stop”?

In this context, Joo stated that if President Moon Jae-in is found guilty of shutting down the reactor, he will not evade punishment even after his resignation.

But the government doesn’t give a damn! Even before the report was released, a senior Industry Ministry official said the government would stick to its current policy of phasing out nuclear power.

On October 22, the South Korean Minister of Industry also confirmed that the reactor’s decommissioning would be carried out under the original plan, despite the audit report.

In this author’s opinion, data manipulation and pressure from the authorities to fulfill the President’s wishes did indeed take place. A completely different investigation will show who exactly had a hand in this manipulation and obstruction of the audit. The question here is whether the conservatives will ensure that the results of the BAI’s work turn into an investigation of the Prosecutor’s office.

If this happens, one could expect either a high-profile scandal or an unpleasant story related to how Choo Mi-ae, Minister of Justice, whom the author recently wrote about, blocks the activities of Yoon Seok-youl, Prosecutor General, in several high-profile cases. The war between the Minister and the Prosecutor has already ceased to be cold, but the details of this confrontation will be covered in subsequent materials.

Konstantin Asmolov, Ph.D. in History and a leading research fellow at the Center for Korean Studies of the Institute of the Far East at the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”.

Please select digest to download: