The Korea District Heating Corporation's heat demand forecasting was inaccurate, and the heat production process was operated inefficiently, according to audit results. It was confirmed that temperatures from further locations or average values were used for demand forecasting instead of temperatures appropriate for the locations and time zones of each branch. It was also found that running generators on weekends, when electricity sales prices are higher than on weekdays, increased heat loss.
The Board of Audit and Inspection announced the results of the 'Korea District Heating Corporation regular audit' on the 3rd.
The Korea District Heating Corporation is a market-type public enterprise that efficiently supplies heat and electricity, and its revenue varies significantly depending on fuel cost fluctuations. Due to an expansion of new investments, its debt ratio reached 257% as of 2021, leading to its designation as a financially risky institution by the Ministry of Economy and Finance.
As a result, the Board of Audit and Inspection focused on checking the economic feasibility of heat supply, the appropriateness of new investments, and waste factors to promote financial soundness.
According to the Board of Audit and Inspection, the heating corporation reduced accuracy by using temperatures from more distant areas or average values instead of the specific time-specific outdoor temperatures for each branch region during the heat demand forecasting stage.
The heat production plan also continued to operate inefficiently as the generator mode was decided manually. In reality, inefficiencies occurred when generators were operated on weekends, when power sales prices are higher, rather than on weekdays, and it was also confirmed that the standard for calculating the error rate of heat demand forecasting was arbitrarily changed and recorded separately.
In the process of new investments, the existing generator capacity was underestimated and future heat demand was overestimated, leading to the construction of unnecessary heat source facilities, indicating a lack of economic feasibility review. In terms of agency operation, while the main business system improvement project was halted due to budget reduction, inappropriate budget execution cases, such as providing all employees with tablet PCs, also came to light.
The Board of Audit and Inspection notified the heating corporation to precisely collect demand forecasting data, such as outdoor temperatures, according to location and time to enhance the accuracy of heat demand forecasting, and to convert generator operations from manual to system-based to thoroughly comply with economic operation policies.
An official from the Board of Audit and Inspection said, 'We demanded accountability for the staff responsible for causing losses due to negligence in economic feasibility review' and noted, 'We require caution to avoid wasting budget on projects with unclear objectives.'