2008

2008 Sustainability Report utiaiiyReport Sustainability World Best 3E Creator Energy｜Environment｜Expertise

Challenge& make a Difference

www.westernpower.co.kr 411 Yeongdongdaero, Gangnam-gu, Seoul 135-791, Korea Tel. 02-3456-7711 Fax. 02-3456-7759 Contents Report Preparation and Epilogue Application of GRI G3 We, Korea Western Power Co., Ltd., apply the G3 guideline of GRI when preparing the 2008 Sustainability Report. We declare CEO Message 04 We deeply realize the importance of sustainable department. The 2nd TF Team increase the completeness of that this report meets the requirements Communication with Stakeholders 06 management. We do our best efforts to actualize the clear report by comprehensively classifying and arranging the data. for above G3 Guideline. Evaluation of Importance 07 management by considering our stakeholder as the top We start the preparation of this report under the goal of The KFQ, Korea Foundation for Quality, verifies that this report acquires the A priority. We organize the TF Team by making use of handling making the best report. However, we feel some insufficiency Degree during the verification process. staffs serviced in our head office for guaranteeing the resulted from limited manpower and time. If you find any Challenge & Make a Difference +Note : The sign, +, means that this report is verified by the 3rd party. substantiality and reliability. errors or defect in our report, please remind us errors or Our History 10 1. Purpose of Publication The 1st TF Team consisting of 22 staffs arrange the activities defects through the reader's questionnaire. we will Vision and Management Strategies 13 The purpose of this report is to open our overall activities, performed by our and accomplishments based on the data provided by each supplement our report based on your comments or opinions. company for completing our social liability, and accomplishments acquired Characteristics of Power Industry 15 through the activities to our stakeholders such as shareholders, government agencies, investors, contractors, local society and civic groups. Governance Structure 16 Decision President & CEO T/F Team Members 2. Report Preparation Standards Risk Management 18 Report verification Verified by the This report has been prepared by applying the Sustainability Reporting Items T/F Guideline 2006 of GRI (G3) and Electricity Utility Sector Supplement (draft) For Ethic Management 20 Adjustment Executive Vice President professional company Su Keun Yang, MD, Management the details, refer to the GRI Index Chart. Project Manager Improvement Dept. Chun Su Kim, Social contribution team 3. Scope and Duration of Report Project manager T/F Team leader Creative Energy leader, Management Improvement Dept. This report has been prepared to explain the business operation of our Seoul Management improvement Analyze the stakeholder and supervise Sun Bin Im, Deputy General Manager, head office and 7 business places. The duration to report is January 1st, 2007 Creative Energy 24 division director the overall report preparing process. Social Contribution Team thru December 31st, 2007. Some accomplishments acquired in July 2008 are Energy Security 25 Carefully prepare and review the included in this report. Our accomplishments acquired over last 3 years 2005 Jeong Lae Im, Manager, Publicity Team challenge & make a difference section. thru 2007 are specified in this report to show the trend of our TF Team Leader Value Creation 27 Carefully prepare and review the accomplishments. Jeong Su Lee, Manager, Financial Team Social contribution team T/F Team creative energy section. Technological Development 30 lader members Carefully prepare and review the clean Jae Chul Lee, Manager, Environmental & 4. Characteristics of Report and Difference from Previous Ones Advisory energy section. Chemical Team Working-level job We publish our Sustainability Report based on the environment report Management Innovation 31 Advised by the TF Team Members(1st, Carefully prepare and review the happy Rae Hyun Jeong, Manager, Construction professional company published in 2004. We published our first Sustainability Report by adding the Important Management Accomplishments 32 2nd) energy section. Team economic and social accomplishments to our existing environment report for Arrange the accomplishments of 21 staffs including Sang Hak Lee, Planning 9 departments the purpose of guaranteeing the smooth communication with our stakeholder. important issues. Dept. We specify the insufficient parts of 2007 Sustainability Report such as DMA (disclosure on management approach), activities related to our stakeholder Clean Energy and importance evaluation more detail. Also, we specify the accomplishment information at end of each section so that the readers may comprehensively Clean Energy 36 check our management accomplishments. Climatic Change and Energy 37 5. Data Measuring and Selecting Standards Utilizing the Resources and 41 Sustainable Management Progressing Trace The financial accomplishments stated in this report are prepared according to Minimizing the Generation of Pollutant financial accounting standards. Our environmental and social accomplishments are prepared according to Important Environmental Indexes 48 2005 Environment Report 2006 Environment Report 2006 Sustainability Report 2007 Community Relations White Book (2005.5) (2006.11) (2007.9) (2007.10) applicable laws or data measuring and selecting standards.

6. Policy and Practice of Verification Agency Happy Energy This report has been verified by the KFQ, the 3rd party verification agency, for guaranteeing the reliability. Happy Energy 52

7. If you have any questions on this report, contact us at following Safety and Health 53 phone numbers and address: Employee Satisfaction 55

Homepage: www.westernpower.co.kr Management Focused on 59 Coexistence with Our Contractors Handling department Together with Local Society 62 Strategy & planning team, Management strategies department Korea Western Power Co., Ltd. Appendix How to contact us Tel : 02-3456-7613 Verification Statements Prepared by 68 Ӌ Our first environment report Ӌ Our second environment report Ӌ Our first sustainability report Ӌ Our first community relations report Fax : 02-3456-7752 the 3rd Party Ӌ We have arranged the environmental Ӌ Build the environment management Ӌ Prepare this report focused on strategies, Ӌ Arrange the social contribution management activities and system and arrange the environmental systems and accomplishments. strategy, organization, system. E-mail : [email protected] GRI Index Chart 70 accomplishments since 2002. accomplishments. Ӌ Nominated as the top company by the Ӌ Arrange the social contribution Ӌ Revise and declare the environment policy Ӌ Ecosystem preservation and stakeholder Hankyoreh Economic Institute. Definition of Words 74 accomplishments acquired after being Challenge & make a difference and environment management plans. partnership -Nominated as the top 4 clean company in separated from KEPCO. Ӌ Decide the long-term environmental goals Ӌ Nominated as the top ESH Value East Asia. This is a management policy slogan showing our strong intention targeting Ӌ Arrange our strategic social contribution Major Awards and Certificates 76 of each area management company. Ӌ Nominated as the top sustainable the sustainable management by making a difference based on the challenging program. Ӌ Strategy to be ready for the climatic change management company. and creative thought. Nominated as the 2008 top social Associations and Organizations Joined by 76 protocol and sustainable management. Ӌ Nominated as the top company for the Ӌ Our company as a Membership Member excellent communication. contribution company. World Best 3E Creator Energy̸Environment̸Expertise

Challenge& make a Difference 04 Sustainability Report 2008 and localsociety. We will beagoodfriendofourpeople We provide thehappyenergy toournation. harmony withhuman,technology andenvironment. We contribute to ournationandsocietythrough thebest energy generated in Clean energy keeps theenvironment clean. Happy energy makes people warm. CEO Message Our esteemed stakeholders! We, Korea Western Power Co., Ltd., deeply appreciate your continual interest and strong support enabling our continual growth. This sustainability report is published as the second edition for the purpose of showing our strong sustainable management intention and meeting the requirements for the global standards.

Recently, the power industry is faced with a lot of difficulties resulted from increased price of power generation fuel and fierce competition. In addition, interest in environment is getting increased, so the eco-friendly plans are considered as a key element in generating the power. We operate our business focused on the sustainable management by accomplishing our responsibility to keep the natural environment clean and overcoming the difficult business environments.

We have tried our best efforts to accomplish our business goals by recognizing the importance of sustainable management since separated from Korea Electronic Power Corporation as the professional power generation company in 2001. We have prepared the sustainable management road map and Vision 2020(3 plus 10), long-term management strategy, to secure the dynamic force of continual growth as a part of efforts to become the global top power company based on our management accomplishments for last 7 years.

The Vision 2020 is prepared to show our strong management intention required for guaranteeing our bright future and accomplishing strategic issues. All our employees keep trying our best efforts to become “World Best 3E Creator” focused on energy, environment and expertise.

We joined the UN Global Compact, autonomic convention organized by the global economic organizations, as a member in May 2006. 10 principles declared by the UN Global Compact such as labor, human right, environment and anti-corruption accorcing to our management strategies such as clean management, environmental management and sustainable management. We have acquired the brilliant management accomplishments by receiving the best power generation company award twice and 05 CEO Message attaining the 6th level, the highest level, in management innovation appraisal of public corporation. In addition, we keep diversifying our business area into construction of tidal power plant and development of renewable energy and overseas power generation business.

This sustainability report is published as the media transmitting the information and the strategic communication manual showing our efforts and business accomplishments to our stakeholders through our sustainable management strategies as well.

We will try our best efforts to build the happy society through the best happy energy generated in harmony with human, technology and environment. In addition, we promise to accomplish our mission as the national company to protect the environment and complete our social responsibility based on our superior technologies. Thank you.

President & CEO Korea Western Power Co., Ltd. Oct. 2008 Communication with Stakeholders

Diverse stakeholders are involved in our corporate activities or management activities, and our stakeholders are influencing each other. In this regard, we consider the reliability with our stakeholders as the top priority for the sustainable growth. We widely open the diverse communication channels to check the needs of our stakeholders. We effectively manage our stakeholders by periodically analyzing the surveyed stakeholders’ needs.

ƜƜƜ Stakeholders’ Group

Items Expected values Communication channels Maximization of Shareholders shareholders’ value, General shareholders’ meeting, president meeting of power companies, board of directors and (government and KEPCO) promotion of public good and government policy consultative organization management innovation

KPX board of directors, general meeting, committees (cost evaluation, revision of regulation, KPX Reasonable power trade information disclosure, Ancillary Services operation technology policy seminar Clients Sustainability Report 2008 Stable supply of high quality Taking opinions via a homepage, webzine (company news letter). KEPCO Survey, electricity Power users 06 power at low price publicity center and voice of customer (VOC) Contractors Clean management and Regular contractor informal meeting, business meeting, manufacturing meeting, TM meeting, (Professional service providers) fair competition P-CRM, special support measure for SEMs, customer satisfaction survey and CCM

CEO Hot-line, conversation with CEO (website), CEO E-mail, dream board, joint labor- management conference, conference between labor and management, click and suggestion Employees system, grievance procedure system, newsletter publication, employee welfare satisfaction Job security, promotion of survey, informal gathering for woman workforce, presentation meeting for employees and Organization welfare and self- participation of social contribution activities members realization Family gathering, communication with CEO (website), newsletter distribution, participation of Families social contribution activities, use of family condominiums, winter camp for children, family event in May (month of family) and visit to dad’s workplace

Local communities Contribution to local economy Local representative meeting, gathering with local residents, committee for regional support, (Local government, local and active cooperation with sponsor to social contribution activities, partnership agreement with civil organizations and hot- residents and citizens and environment and local line for collecting opinions environmental group) community issues Evaluation of Importance

We, Korea Western Power Co., Ltd., keep evaluating the importance of our stakeholders in terms of social interest, ripple effect and concordance to our business strategies based on the opinion acquired through communication with our stakeholders.

(high) ȸ ƜƜƜ Derivation of Important Issues and ۙۚ Long-term manpower Correspondence to climatic Evaluation of Importance fostering program, change, starting the renewable 32 important issues are derived through the workshop with corporative moral, facilities energy business, strategic reliability, opening of new management system, future our strategic group and professional consulting companies, business and cooperative growth engine and cooperation labor-management relation with contractors communication for each channel, review of media and survey. We select 21 issues out of 32 issues by classifying

Improvement of facilities the issues for each theme and then evaluate the interest Influence productivity, reinforcement of core technology, stable level using our evaluation standards. We evaluate the Cooperation with local society, procurement of fuel, social contribution, quality building the foundation controllable property and impact to society against the management and required for expanding the reinforcement of innovative selected issues. power facilities, building the capacity and employees’ ability advanced information system and securing theۛۜ (low) strong financial force ȸ (low) Controllable property (high) ƜƜƜ Result of Deriving the Important Issues Accomplishments and efforts to correspond to 10 issues frequently raised and included in the areas of ۙ, ۚ and ۛ 07 Evaluation of Importance are stated in the report in detail. The range and level of report will be reinforced in the future.

Important issues Important accomplishments and direction to progress Pages to refer Reinforcement of eco-friendly system, securing the carbon emission right, reducing the Correspondence to climatic change Page 37 greenhouse gas, promoting the CDM project Completion of the biggest solar photovoltaic power generation plant in Korea and starting the Starting the renewable energy business Page 28 construction of tidal power generation plant and coal gasification plant Strategic management system Preparing the Vision 2020 road map and 2008 management strategies Page 13 Open of Philippine overseas corporate and starting the construction of Laos hydro power plant, Future growth engine Page 19 Indonesia thermal power plant and combined cycle power plants in Korea Cooperation with contractors Providing the R&D Support, financial support, sales network and global marketing Page 59

Long-term human resource development Preparing the career development program and reinforcement of incentive system Page 57

Corporative ethics Reinforcement of system, organization and ethic monitoring feedback Page 20

Reliability of facilities Keep the stability and efficiency as the global top level Page 24 Providing the support required for the construction of infrastructure around the power plant and Cooperation with local society Page 62 local culture support program Social contribution Strategic partnership based on cooperation with local society Page 62

Challenge and make a difference

We will become your happy partner by being with you all the times just like the sun, water and air.

Challenge & make a Difference 10 Sustainability Report 2008 commissioning capacityandOperation&Maintenanceability and coalpowergenerationbusinessbasedonoursuperior we activelyprogressthehydropowergenerationbusiness and projectbiddingcapacityofprivatesector.Inaddition, effect byconsolidatingourpowerplantoperationcapacity business undertheintentionofmaximizingsynergy power generationbusinessandintegratedenergysupply energy useefficiencybystartingthesteamsupplyand We operateourbusinessfocusedonincreasingthenational industry. business, businessdiversificationandglobalizationofpower company throughtheexpansionofrenewableenergy addition, westeadilypreparetobecomethegeneralenergy regulations andacceleratedopeningofpowermarket.In environments suchasinternationalenvironmental sustainable growthintherapidlychangingmarket We activelyreacttothechangingparadigmfor Our History

3112 Vision 2020(3plus10). our strategicandpracticalsustainablemanagementintentionbyestablishingthelong-termstrategies, We collectedthewisdomandpassionofallouremployeestobecomeglobaltopenergycompanydeclared generation capacityof9,601MW. industry in2001.Currently,weoccupy13%marketshareKoreanpowerbyowningthe professional powergenerationcompanyforthepurposeofreinforcingcompetitivenessKorean We, KoreaWesternPowerCo.,Ltd.,havecontinuallygrownforlast7yearssinceseparatedfromKEPCOasthe Ӌ Ӌ Ӌ Ӌ installation project. desulfurization facilities plant No.5. our Taeanthermalpower and CIweredeclared. Ltd. wasincorporated. Started ourPyeongtek Completed theconstructionof Our corporatephilosophies Korea WesternPowerCo.,

3113 Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ our allbusinessplaces. Taean thermalpowerplant. generation company. Eurobond. Taean thermalpowerplantNo.6. including theprincipleswasdeclared Acquired theISO9001certificatefor Acquired theOHSAS18001forour Nominated asthetoppower Successfully issuedourfirst Completed theconstructionofour Our ethicmanagementpolicy generators, andreinforceourR&Dactivities. level byaccomplishingthegoal,zerodefectoperationofall technologies tomaintainthereliabilityofourfacilitiesattop We operateourbusinessfocusedondevelopingthe fuel cell. coal gasificationpowergenerationbusinessanddevelopthe future energy.Inaddition,wedoourbesteffortstostartthe industry bydevelopingtherenewableenergy,unlimited in 2012ordertosecurethesuperiorpositionpower construction oftidalpowerplantscheduledtobecompleted plant andsmallhydropowerprogressthe Also, weoperatethesolarphotovoltaicpowergeneration overseas subsidiary,inthePhilippines. InternationalCorporation,ourfirst incorporating KOWEPO Storage projectandotheroverseasdevelopmentprojectsby foundation tostartthepowergenerationbusiness,LNG for theaccesstooverseaspowermarket.Webuild

3114 Ӌ Ӌ Ӌ Ӌ management. the areaofenvironmental nominated asthetoppowerplantin the areaofqualitymanagement. thermal powerplantsNo.7and8. management innovationtechnique. Our Taeanthermalpowerplantwas Awarded thepresidentialprizein Started theconstructionofTaean Introduced the6sigma

3115 Ӌ Ӌ Ӌ Ӌ Ӌ the areaofsafemanagement. nominated asthetoppowerplantin prize. plant. business places. technique wasappliedtoallour Our Taeanthermalpowerplantwas Awarded thenationaltopquality Safety controlcharterwasdeclared. Closed ourGunsanthermalpower 6 sigmamanagementinnovation Challenge and make a difference 11 s and (As of Dec. 31, 2007) 176 billion won 3,885.1 billion won 3,069.1 billion won 100% Sales Capital Equity ratio Total assets Namsun Electric was incorporated in May 1946 Vision 2020 World Best 3E Creator was declared. Published the first sustainability report. Incorporated KOWEPO INTERNATIONAL Completed the construction of Chongsong pumped Completed the construction of Taean thermal power Started the construction of Gunsan combined cycle Incorporated the joint corporation, Garolim Tidal Power Completed the construction of Samrangjin solar Awarded the top sustainable management prize in the Nominated as the top company in the area of Nominated as the top company in the area of energy. CORPORATION, first overseas subsidiary. storage power plant. plants No. 7 and 8. power plant. Plant Co., Ltd. photovoltaic power generation plant(1Step-2000kWp). area of innovation. productivity in the area of facilities innovation.

Son, Dong-Hee April 2, 2001 1,985 KEPCO

Evaluated as A-, A1 and AAA by the S&P, Moody Evaluated as A-, A1 and AAA T/P Complex Div., Taean T/P Complex Div., Pyeongtaek Samrangjin PS Generation Seoincheon CC Complex Div., Dept., and Gunsan CC Dept., Cheongsong PS Generation Construction Office. Korean credit rating agencies respectively. Korean credit rating agencies Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ 3118 KOSPO EWP KHNP CEO Date of Number of employees Controlling Power plant shareholder Credit rating incorporation complex sites WP 2001.4.2 in Jul. 1, 1961 (KEPCO) in Jan. 1, 1982 Kyungseong Electric was incorporated in Sep. 1915 s. ů Awarded the prime minister prize for the Awarded the prime minister prize. Nominated as the top company in the Nominated as the top company in the Completed the Seoincheon gas turbine Acquired the credit rate of A1 from the Published the ethic management guide. Joined the UN Global Compact as a Nominated as the top management excellent cooperation with contractors. area of environment. area of clean management. performance improvement project. Moody member. company.

KOMIPO

Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ 3117 Above three companies were consolidated into a Korea Electric Company Above three companies were consolidated into a Korea Name of above company was changed into Korea Electric Power Corporation Name of above company was changed into Korea Electric KOSEP Choseon Electric was incorporated in Aug. 1943 Completed the installation of our Our company song was composed. Joint venture, Cheongna Energy, was Completed the construction of Taean Started the operation of BSC Awarded the best facilities management Awarded the management innovation Awarded the quality grand prize. Awarded the top ESH Value management Pyeongtaek desulfurization facilities incorporated. solar photovoltaic power generation plant. Accomplishment management system. prize. grand prize. grand prize Company Profile

Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ 3116 Ɯ Ɯ Also, we install and operate the human resources install and operate Also, we the designed to foster system (e-HRD), development systems management employees, and advanced competent such as BSC(Balanced new innovative energy to create the Score Card) and 6 sigma. trying our best efforts to make our In addition, we keep clean and settle the innovation as our corporate governance we pursue the sustainable corporate culture. Furthermore, the balance and harmony our management considering responsibility. profit and social & environmental Ɯ Number of Capacity Percentage Items Plants Total units (MW) (%) Taean 8 500 4,000 Thermal Pyeongtaek 4 350 1,400 Sub total 12 5,400 56.24 Gas turbine 4 80 320 Pyeongtaek Steam turbine 1 160 160 Combined Gas turbine 8 150 1,200 cycle Seoincheon Steam turbine 8 75 600 Sub total 21 2,280 23.75 Samrangjin 2 300 600 Pumped Cheongsong 2 300 600 storage Sub total 4 1,200 12.50 Taean 1 0.12 0.12 Solar Samrangjin 1 3 3 Sub total 2 3.12 0.03 Gunsan Gas turbine 2 233 466 Under combined cycle Steam turbine 1 252 252 construction Sub total 3 718 7.48 Total 42 9.601.12 100 Sustainability Report 2008 12 ƜƜƜ Organization Operating Structure recorded as the biggest bituminous coal thermal power Our organization, organized for reinforcing the responsible plant in Korea. In addition, we incorporated the Garolim management of each unit, is operated focused on the tidal power plant construction department for the successful horizontal structure and work process for, the best completion of tidal power plant under the intention of being efficiency. ready for the climatic change convention and meeting the Our headquarters consists of 2 divisions, 5 offices and 5 requirements for the renewable energy policy of Korean departments. Each power plant complex site consists of 3 government. divisions and 4 departments. We secured the profitability by completing the Taean

ƜƜƜ thermal power plants No. 7 and 8 as a part of effort to Employees (As of Dec. 31, 2007) secure the growth engine. Our Taean power plant division is Office Technical Skilled Temporary Item Director Total staffs staffs workers employees Number 4 226 1,531 66 158 1,985

Headquarters : 2 divisions, 5 offices and 5 departments Power plant complex sites : 7 places CEO

Auditor Audit & inspection office

Management Administration Information Engineering innovation office division promotion office division

Planning & Procurement & Business Power coordination General affairs Power Trading Office of Head development Power construction Dept. support Dept. Dept. office move office generation Dept. Dept.

Taean T/P Pyeongtaek T/P Seoincheon C/C Samrangjin P/S Cheongsong P/S Gunsan C/C Garolim Tidal Power Complex Div. Complex Div. Complex Div. Power Generation Dept. Power Generation Dept. Construction Office Construction Office Challenge and make a difference 13 responsibility company in Korea Complete the social Reinforce the eco-friendly management system. Build and reinforce the ethic management system. Activate the social contribution. Improve the corporate image. Become the top 10 admired Ӌ Ӌ Ӌ Ӌ Employee motto Pursue the best based on the faith. Accomplish 6 sigma Reinforce the global competitive capacity management quality Build the advanced management system. Reinforce the human resource development system. Enhance the efficiency of organization. Reinforce the technical competitiveness. Ӌ Ӌ Ӌ Ӌ Management Policy: Challenge & make a & make Challenge Management Policy: difference our management We, Korea Western Power Co., Ltd., decided and differentiate policy as “Challenge & make a difference” by innovating our our quality from the ones of our competitors efforts are clearly work process, people and product. These as sustainable shown through our definite goals such capacity and management, reinforcement of innovative actualizing the open management. 20% engine Create the future growth World Best 3E Creator (Energy, Environment and Expertise) Expand the power generation related business. Start the renewable energy business. Access to overseas power generation market Build the foundation required for starting the power generation business in North Korea Increase the percentage of renewable energy business and overseas business up to Ӌ Ӌ Ӌ Ӌ Management policy Challenge & make a difference position of 17,000MW We contribute to the growth of society through the best energy generated in harmony with human, technology, and environment. We contribute to the growth of society through the best Accomplish the sales of 5 Increase and optimize the capacity of facilities. Systematically manage the life cycle of facilities. Maximize the facilities operation efficiency and reliability Optimize fuel supply and demand Secure the superior market trillion won/facilities capacity Ӌ Ӌ Ӌ Ӌ Vision Mission Vision 2020 (3 Plus 10) Vision Goals Strategic issues All our employees do our best efforts to completely perform our mission as a national company organized for the our mission as a national company organized our best efforts to completely perform All our employees do with human, the best energy generated in harmony to the growth of society through purpose of contributing is changing, and because the industrial structure The demand for energy is decreasing technology and environment. to be ready for the eco-friendly energy is increased the core technology and developing the necessity of securing declared our regulations. In this regard, we technical environment and environmental the rapid change of vision in Sep. 2007. strategy by establishing the long-term sustainable management Ɯ Strategic directions Ɯ Ɯ to all our We prepared the new growth strategy applicable preoccupying the management factors for the purpose of We decided market in the unstable market environment. environment and three main factors such as energy, prepared four expertise for our growth engine and then the superior long-term strategic directions such as securing growth engine, market position, creation of future and completion reinforcement of global competitive capacity of social responsibility. Vision and Management Strategies and Management Vision Long-term vision: World Best 3E Creator Best Long-term vision: World ƜƜƜ Vision 2020(3 Plus 10) management strategy Reinforcement of core Foster the core manpower / capacity Secure the superior technology / Vision 2020(3 Plus 10), our bright future in 2020, is our long- Operate the power generation facilities focused on operation term project intended to actualize our overall visions during efficiency the period of 2007~2010, our current CEO’s term of office and period of 2011~2020. We have prepared and progressed Process (As-is) our short-term business goals and long-term business goals based on this vision 2020 (3 Plus 10). We have decided the action plans for the improvement of our management People Challenge Difference efficiency by reflecting 12 indexes in 4 areas for evaluating our management accomplishments and 14 elements in 5 Competitive areas for evaluating the innovation. Ethic and customer Reinforce the dynamics of satisfaction management / Product organization / Perform the social Pursue the horizontal responsibility / corporate culture and Create the continual revenue labor-management through the management relation / innovation / Improve the living quality Create the future growth Sustainable Actualizing the engine management open management

2008 power 2008 company plant complex Vision 2020 management site (3 Plus 10) strategy management strategy Sustainability Report 2008 16 strategic 10 strategic 10 strategic 14 issues and 40 goals and 30 goals and 50 detailed action detailed action detailed action plans plans plans

Ӥ 2008 company management strategy

Vision Vision 2020 10 Strategic goals 30 30detailed strategic action issues plans

Effective operation of power generation facilities Reliability of facilities/productivity of facilities/core technologies Secure the superior market position Optimize fuel supply and demand system Stable procurement of fuel Increase the capacity of facilities Capacity of facilities, new construction site and construction process Renewable energy/overseas market/heat supply and combined cycle Create the future growth Diversify the power generation business and power generation/construction management and superintendent engine related businesses business World Best Strategic management system/innovative capacity/accomplishment Build the accomplishment-oriented system 3E Creator management/clear personnel policy/information system Reinforce the global Return on invested capital (ROIC)/strong financial structure/budget competitive capacity Create the continual revenue and organization Foster the global manpower Foster the core manpower/develop the capacity Reinforce the ethic and environment Ethic management/environment management management Perform the social Management evaluation/innovation/moving of Head Office/labor- responsibility Actualize the customer satisfaction management management relation/corporate image Activate the social contribution Support the local society/social contribution/support the contractors Challenge and make a difference 15 Requirements for the customers Requirements for the customers Stable trade of power at the cheapest price Supply of high quality power Fair market operation (Comply with regulations) Operation of Power Market of Power Operation Regulations Applicable to Power Industry to Power Regulations Applicable Ɯ Ɯ Profitability Reliability Fairness Ɯ Ɯ Ɯ to applicable The power trade market is operating according laws and acts such as Electricity Business Act and Power Market Operation Regulations. The power trade market is classified into the entire market’s profit, stable power supply and fairness of transaction. The clause 31 of Electricity Business Act enforces the power generation company and power provider to transact the power only in the power market. Ɯ applied to The Electricity Business Act is comprehensively business, and the power plant operation and construction are applied Power Market Operation Regulation & Guideline with the Clean to the power trading area. We strictly comply Act in Air Conservation Act and Water Quality Conservation In addition, we emitting the environmental pollutants. and inspect our frequently(monthly and annually) check gas facilities, fire power generation facilities, high pressure facilities for the fighting facilities, and disaster preventing laws and safe operation of facilities according to applicable Act, High-pressure regulations such as Electricity Business Chemical gas Safety Law, Fire Fighting Act, and Hazardous Materials Management Laws. Value standard Value standard Customers Customers Operation of market Operation of system Operation of trade business s option and justifiability of Business area Business area Characteristics and Legal Position of Power and Legal Position Characteristics Industry Power generation business Classification of Market Ɯ The electric power energy is hard to store and transmitted at the speed of light, so the power generation and at the speed of light, so the power generation energy is hard to store and transmitted The electric power system in the opinion of introducing the competitive exactly balanced in every second. The consumption must be and expand has been raised to open the market under the exclusive environment, power industry, operated because of current companies is not expected right now The competition against foreign power customer’s choices. foreign power Korean power companies and However, the fierce competition between market characteristics. is opened to or merged, and power generation market if the power company is privatized companies is expected foreign power companies. Ɯ allowing the participation to many companies. The Korean allowing the participation to many companies. generation area of government decided to split the power according to KEPCO into 6 power generation companies in April 2001. basic power industry restructuring plans Currently, five power generation companies such as KOSEP, KOMIPO, KOSPO, EWP and KHNP and other independent power producers such as POSCO, LG Power, LG Energy and K-Water make a competition in the power generation market with us. The competition against foreign power companies is not expected right now because of current market characteristics. However, the fierce competition between Korean power companies and foreign power companies is expected if the power company is privatized or merged, and power generation market is opened to foreign power companies. Ɯ power industry by The Korean government has operated the and power price controlling the facilities investment plans the exclusive for the public good in return for allowing of power industry rights. However, the scale and structure the inefficient and is getting increased and complicated, so the monopoly and uneconomical problems resulted from issue. In this regulation have been raised as the social system in regard, the opinion of introducing the competitive the exclusive the power industry, operated under alternative in environment, has been raised as an consideration of customer Characteristics of Power Industry Power of Characteristics Ӥ Governance Structure

We, Korea Western Power Co., Ltd., are one of 6 power generation companies created by dividing the power generation part of KEPCO in April 2001. All our equities are owned by KEPCO. We have tried to do our best efforts to build the clean governance structure and decision making system. We guarantee the clear decision making by periodically organizing the board of directors consisting of non-standing members more than 50%. We allow the working-level staff to raise the opinion in the board of directors’ meeting as a part of efforts to improve the top-down decision making system. In addition, we try to build the 2-way communication system required for guaranteeing the clear decision making by operating the youth board of directors, Dream Board, and then positively reflecting the ideas raised in the meeting to the overall management procedures. In addition, all our management activities are periodically audited by the government and National Assembly for the clear and effective work performance.

ƜƜƜ ƜƜƜ

Sustainability Report 2008 Reinforcing the Expertise of Board of Transparency of Clear Board of Directors 16 Directors The board of directors consists of standing directors We currently operate the recommendation committees for including the CEO and non-standing directors. The CEO is the selection of the president and standing directors to assigned or serviced as the chairman of board of directors. increase the expertise and capacity of executive officers and The board of directors consists of 3 standing directors, 4 guarantee the fairness of appointing procedures. While the non-standing directors and an executive auditor. The board recommendation committee for the new president consists of directors is operated according to applicable laws such as of non-standing directors and private commissioners, commercial laws and regulations. The board of directors is recommendation committee for the new standing directors clearly operated by excluding the director related to the consists of standing directors, non-standing directors and agenda from the vote. outside director. The recommendation committee for the president and the standing directors evaluates if the management plans of the candidates are appropriate and then recommend the qualified candidate to the general ƜƜƜ Activated Operation of Board of Directors shareholders’ meeting. We frequently evaluate whether the board of directors is The purposes of our board of directors are to examine the appropriately operated by monitoring the number of overall management issues and control the overall meeting, the percentage of attendance, and the number of management activities by reviewing the examined agenda. suggestion to activate the operation of board of directors.

Titles Names Experiences President & CEO Dong-Hee Son ӋMD, Kumho Nuclear Power Generation Div. of KEDO, KEPCO ӋPresident & CEO, WP Executive auditor Sung-Jin Jeong ӋIncheon branch manager of KEPID ӋProfessor, management Dept., Hoseo Univ. Standing Won-Su Choi ӋPower distribution manager, KEPCO ӋManagement director, WP directors Woo-Chang Cho ӋPower generation division director, WP ӋBusiness division director, WP Bok-Sub Lee ӋAdvisory member, Nonsan city ӋAdvisory member, Democratic Peace Unity Committee Non-standing Kwang-Hee Lee ӋProfessor, Unity of Faculty of Inje Univ. directors Seok-Hoon Woo ӋHead of climatic change convention preparation TF Team, KEMCO Seung-Hwan Kim ӋChief, education institute, KEPCO ӋTechnical planning director, KEPCO Challenge and make a difference 17 08.12 2 14 20 Under The 4th 07.7~ (In service) processing The 4th board 06.12 5 8 10 The 3rd the works adopted. 6 06.1~ reflected to opinions are The 3rd Board 2 opinions are 05.12 3 11 10 works The 2nd adopted. 7 05.1~ opinions are 2 opinions are The 2nd Board reflected to the 04.9 3 12 50 The 1st 03.5~ the works reflected to The 1st board 6 opinions are Management Accomplishments Improvement Management Accomplishments and Compensation Evaluation through Items Items meetings Accomplishments Acquired through the Operation Accomplishments Acquired members proposals of Dream Board Number of Number of Number of Number of Ɯ Ɯ Term of service Ɯ of We fairly evaluate the management accomplishments and provide the each executive officer including the CEO based on the compensation to each executive officer the management evaluated results. We try to improve agreement accomplishment by signing the management the management with our mother firm, KEPCO, by deciding goals accomplished by the CEO during his or her service term. We also try to actualize the responsible management intended to evaluate the management accomplishment of each director by signing the management agreement with each standing director. meeting is organized or held more than once for each more than once organized or held meeting is to the meeting are reported ideas raised in the quarter. All for the and used as the data being screened, CEO without officers. We build and operate decision making of executive’ system and many other works/systems the risk management of Dream Board. by reflecting the ideas adopted opinions Ӥ - 8 16 2007 2007 9 5 3 2006 2006 - 7 2 2005 2005 Items Items ”Dream Board”, Youth Board of Directors Youth Board Board”, ”Dream Improved Operation Efficiency of Board of Directors Ɯ Ɯ Number of agendas revised Number of meetings called Number of policies reflected Ɯ We operate the Dream Board, youth board of directors, under the intention of reflecting the creative ideas of young employees to our overall business operation. The Dream Board consists of young employees. The regular We guarantee the easy access to information by opening the We guarantee the easy used by our employees to the non- homepage exclusively we do our best efforts to publicize standing director. Also, of directors by the activities performed by the board by the board of operating the homepage exclusively used directors. meeting before In addition, we organize the explanation the non-standing opening the board of directors for allowing All important directors to actively raise their opinions. reported to the management issues are shared by being are invited to our board of directors. Non-standing directors for the better power plants and employees’ gathering we improve the understanding of company. Also, board members as management efficiency by appointing the the commissioner of various internal committees. Ӥ Risk Management

We, Korea Western Power Co., Ltd., do our best efforts to protect the company from the dangerous management environments and enhance the value of company. Also, we try to maximize the profit by eliminating or minimizing the risk factors. In this regard, we hold the risk management committee organized in 2003 on a quarterly basis. This risk management committee consists of 10 commissioners and risk handling managers. This committee plays the role of managing the overall risks of company. The risks are managed with being classified into financial part, fuel part, power trading part and overseas business part. The working-level specialists consisting of related managers check the risk factors of each part and then report the counter plans to the committee. The committee consisting of team leaders plays the role of examining and resolving the reported counter plans.

ƜƜƜ

Sustainability Report 2008 Financial Part : keeping up healthy financial rating of A1 from the Moody’s and the highest level (AAA) 18 status from domestic rating agencies. This part plays the role of keeping the financial conditions at appropriate level by removing the risks resulted from the ƜƜƜ Fuel Part : stablized fuel supply fluctuations in exchange rates, the interest of foreign The supply of power generation fuel is mainly dependent on currency debt and minimizing the default risk resulted from the overseas market, so the high risk is expected when the the lack of fund. This part positively manages the financial procurement environment is changed and price of fuel may risks resulted from the change of management environment be changed at any times. We guarantee the stable supply of by installing the exchange risk management system and fuel by maintaining the enough stock and diversifying the long-term management forecasting system by means of suppliers. Also, we reinforce our capacity to forecast the applying the 6 sigma technique. This part acquires the market environment and manage the fuel procurement risk excellent accomplishments by decreasing the interest rate through the consultation provided by the management by means of diversifying the investment fund raising sources advisory committee. As a result, we decreased the fuel cost and minimizing the debt ratio. We acquire the high credit by securing required fuel before the hikes in world natural resource prices and transportation cost via a position swap signed with the South African coal+supplier. Ӥ Interest ratio to total borrowings (interest rate) Items 2005 2006 2007 5/:6 Number of stock days 20 20 20 5/: Ratio between long-term supply 5/: 85:15 96:4 79:21 5/96 and short-term supply Number of long-term suppliers 13 17 28 5/9

5/86

5/8 5/8 5/76

5/7

5/66 5/7

5/6

5/56 3116 3117 3118 (year) ƜƜƜ Power Trading Part: Organized to reinforce ƜƜƜ Overseas Business Part the capacity to forecast We operate the overseas business risk management This part does its best efforts to increase the sales by committee consisting of specialists under the intention of carefully analyzing the effects expected when the power actively overcoming the rapidly changing market market operation regulations or rules are revised. This part environments and systemically managing the risks resulted operates the power market simulator (Plexos) for the from the development projects such as exchange rate and purpose of forecasting and analyzing the fluctuation risk of interest rates. This committee decides the important issues sales volume and power sales price resulted from the about basic direction and plans of overseas project, external factors. Also, this part forecasts the power sales agreement, investment, fund raising, incorporation and price and then shares the forecasted results with relevant operation of overseas subsidiary. We try to start the departments or parts. overseas projects such as Philippine hybrid power generation project, Laos hydro power plant construction project and Indonesia coal thermal power generation based Items Increased sales Increase the sales price of capacity payment of the on above efforts. 1.2 billion won Cheongsong pumped storage power plant. Operate the renewable energy generator. 2.3 billion won Perform the planned preventive maintenance during 0.57 billion won the peak season. Change the stop procedures of steam turbine in the 0.25 billion won Seoincheon power plant.

ƜƜƜ Power Generation (Construction) Part: Organized to prevent the accidents We minimize the effect on power system by preparing the emergency training program and regulations to be ready for the accidents. These programs and regulations make a contribution to the stable power supply essentially required for the national economy and living of people. 19 Challenge and make a difference We monitor whether the environmental pollutants are emitted by operating the monitoring system for 24 hours and then take the required actions. Also, we keep the facilities under the optimal conditions by preparing the preventive maintenance plans required for the stable power supply and operate the accident recovery system by installing the safeguard designed to stop the generator under the stable condition. As a result, we are nominated as the top company in the area of facilities reliability for 2 consecutive years.

Items 2006 2007 Increase or decrease ratio

Possible power 92.43% 93.07% Improved 0.64%p generation index

Base load loss resulted from 0.46% 0.25% Improved 0.21%p unplanned stop Number of defective per 0.17 0.19 Maintained as the level of 0.02 facilities Deadline meeting ratio of power plant 95.21% 96.20% Improved 0.99%p construction Ethic Management

We keep trying to show the integrity and morality as a public corporation playing the core role of supplying the electric power, driving force of industrial growth nationwide. We decide the sustainable management as the top priority of management policies. We prepare the action plans required for building the ethic management system and operate our business based on the prepared action plans after introducing the ethic management in 2002. We do our best efforts to upgrade the level of ethic management by periodically monitoring the customer’s complaints. Also, we have observed 10 principles in 4 areas of human right, labor, environment and anti-corruption since joined to UN Global Compact as a member in May 2006. We have signed the clean duty agreement with all our directors and prepared the punishment regulations applicable upon violation since Dec. 2006. We have developed and applied the ethic management index (WeBEX) since 2007. Also, we prepare and perform the long-term ethic strategies in relation to long-term Vision 2020 (3 Plus 10). Sustainability Report 2008 20 ƜƜƜ Building the Ethic Management System ƜƜƜ Ethic Management Education or Training All our employees perform their duties and works according We prepare the phased ethic management education plans to ethic charter and creed, and policies of company. We according to comprehensive ethic management action road prevent corruption by enforcing our employees who map and then perform the prepared plans. We frequently handling the procurement works, service works and train the importance of ethic management to all our contract works to sign the clean agreement as well as our employees for preventing any possible corruption. The ethic contractors to clean agreement performance pledge. educations have been performed to all of our employees for Especially, we prevented our employees from receiving the 30,090 hours in 2007. Also, our directors or executive inadequate entertainment and bribe from our contractors by officers show their strong intention to observe and practice stipulating the action policies in 2007. the ethic management by completing the “Clean Power”, cyber ethic management education program.

ƜƜƜ Ethic Management Actuality Monitoring Ӥ Systematic Diagram of Corporate Ethic Charter We keep monitoring the ethic management actuality through the ethic management office and auditing office. Our creed Ethic charter Also, we periodically monitor our contractors, employees Present the corporate ethical idea and value system and local society for enhancing our reliability and our customers’ satisfaction through the professional survey Ethic management action policies Corporate agencies. Each site is evaluated by applying the monitoring ethic action Prepare the ethic management action system and policies results to each site evaluation system. formulate the action system.

Our creed action guideline ƜƜƜ Ethic Management Level Evaluated by the Present the action guideline required for actualizing the ethic management Professional Survey Agency Corporate ethic Our creed action policy guide The Ministry of Knowledge Economy conducted the ethic action rule Provide the definite guide information required for management fact-finding survey (KoBEX: Korean Business actualizing the ethic management by presenting the legal background and case of action policies Ethics Index) against our company in 2007. As a result, our Challenge and make a difference 21 :/22 3118 Cyber education Cyber education On-line education All employees Widely spread the ethic management and reinforce the recognition of ethic management 3117 :/17 Phone manner satisfaction survey Phone manner satisfaction survey Our employees Twice per year Phone monitoring Whether the phone is answered in time. Whether the phone is received kindly. Workshop Consigned education Ethic management handing staffs Foster the manager to lead the change. 9/33 3116 Working-level education Working-level education employee employee Results of KOBEX(Korean Business Ethics Index) 2 8 3 6 4 5 : 7 9 1 21 Ӥ Legal Actions against the Unfair Competition the Unfair against Legal Actions Actions and Monopoly of Fair Trade Law and observe the We respect the sprit Our ethic management level is overall regulations. so no legal action is conducted continually monitored, in relation with fair trade. against our company and Service of Products Supply any laws and regulations in relation We have not violated of power resources and power with development is issued against our company. generation, so no fine related to our Also, we have not violated the regulations the power. customer’s health and safety in supplying Ethic satisfaction survey against Ethic satisfaction survey against Our employees Twice per year Mail survey Level of ethic recognition Ethic regulation is observed. Ethic activities :1/2 9:/3 3118 :7/: Leader fostering education Leader fostering education Phone manner satisfaction survey Consigned education Group education Employees of above manager level Foster the leader by letting each employee to recognize the problems resulted from the unethical work practice :1/2 98/7 contractor contractor 3117 :7/6 Ethic satisfaction survey against Ethic satisfaction survey against 94/4 Twice per year Phone survey Check whether corruption is experienced and recognized. Administration system is available and ethic is practiced Ethic satisfaction survey against employee(CEM) 94/9 Basic education Basic education 3116 :1/5 Circular education Group education All employees including new employees Explain the importance of ethic management. 95/9 Cycle Items Items contents Methods 3115 9:/: Items Items Observing the Laws Monitoring Status Monitoring Results and Feedback Ethic satisfaction survey against contractor(CCM) Ethic Management Education System 1 Ɯ Person to educate or train Contractor handing staffs Ɯ Education type Employees to educate or train Purposes 81/1 :1/1 71/1 91/1 Ɯ the advertisement relevant We have faithfully observed recorded any violation of regulations, laws. We have not in relation with marketing standards and rules customers. communication personal information of our company was nominated as the excellent company in the excellent company nominated as the company was structure, customer, and local areas of CEO, governance was conducted to measure the ethical society. This survey of important stakeholders such as accomplishments contractor, market and local society. employee, customer, Marketing Communication Marketing Ӥ Ӥ 211/1 Survey results (company average) Ӥ Creative Energy

We will become the Korean top energy company as your innovative partner creating the bright future.

Technology & Energy

24 Sustainability Report 2008 business goalsofaccomplishingthesales5trillionwon, our managementstrategy,Vision2020,anddecided We havepreparedourlong-termfinancialplanslinkedto position inKoreanpowergenerationmarket. investment undertheintentionofsecuringsuperior area bydevelopingthecoretechnologiesandincreasing covering therenewableenergyareaandenvironmental best effortstobecomethegeneralenergycompany and developmentofeco-friendlypowersource.Wedoour to overseasmarket,diversificationintorelatedbusinesses the futuremanagementenvironmentsthroughaccess progressed thediversifiedbusinessmodelstobereadyfor guarantee thestablepowersupplyanddeveloped r We, asapubliccorporation,havefulfilledour Creative Energy facilities andreducingthepowergenerationcostasapartofeffortstoguaranteestablesupply. Ltd., operateourbusinessfocusedontheenergysecuritybyexpandingfacilities,increasingefficiencyof investment, istheessentialenergysourcewhichimpossibletostoreandrecycle.We,KoreaWesternPowerCo., The electricpower,acapital-intensivenationalinfrastructurerequiringthebigscaleoffacilitiesandlong-term esponsibility to improvement activities. operate theimprovementsystembypromoting of andfaircompensationfortheperformedworks improve ourworkcapacitythroughtheobjectiveevaluation the KPIforcontinualgenerationofaccomplishment.We innovative activities,progresstheBSCstrategyandgenerate In addition,allouremployeesactivelyparticipateinthe monitoring resultsupondecisionmaking. management forecastingsystemandreflectingthe management environmentinrealtimeusingthelong-term overcome theenvironmentalchangebymonitoring in 2020.Allourdirectorsandexecutiveofficersactively debt ratioof50%andoverseasbusinessproportion20% Creative Energy 25 competitiveness. Power Generation Facilities Construction Facilities Generation Power Plans Power Generation Facilities Operation Facilities Generation Power Status Ɯ Ɯ Ɯ Ɯ Ɯ We plan to expand our power generation facilities of 6,348MW on or before 2017 in consideration of global greenhouse gas reduction program and fossil energy reduction, expected to be depleted in the future, by reflecting the Garolim tidal power plant construction plans and integrated coal gasification combined cycle power plant construction plans to our 4th power supply and demand plans. Especially, we plan to extend the service life of our Pyeongtaek thermal power plant to be closed in 2011 and 2013 as a part of efforts to maximize the operating capacity at low cost and improve the profitability and cost Ɯ 13% (8,884MW) We, Korea Western Power Co., Ltd., occupy generation capacity and 12.1%(48,728GWh) of Korean power The capacity of and power generation amount respectively. increased from our power generation facilities has been 40% last 6 years. Our 6,346MW in 2001 to 8,884MW in 2007 for increased from power generation amount has been 87.7% last 6 years. 25,965GWh in 2001 to 48,728GWh in 2007 for power supply in the We made a big contribution to the stable of Taean peak season in 2007 by completing the construction of schedule. Our thermal power plants No. 7 and 8 ahead capacity of Gunsan power plant with power generation operation of 718MW is under construction for the stable power generation facilities. Dpbm MOH Ifbwz!Pjm Qvnqfe!Tupsbhf

Hvotbo)829NX* Difpohtpoh)711NX* Tbnsbohkjo)713NX* Tfpjodifpo )2-911NX* Ubfbo)3NX* Qzfpohubfl)591NX* 5-313NX Difpohtpoh Tbnsbohkjo Qfbl!Mpbe

Under operation under construction

Qzfpohubfl )2-511NX* 2-511NX Njeemf!Mpbe Tfpvm

Ubfbo )5-111NX* 5-111NX Ubfbo Hvotbo Tfpjodifpo Cbtf!Mpbe! Qzfpohubfl 1 Above power generation capacity and number of power generation complexes are calculated as of end of 2007 Qpxfs!hfofsbujpo!dpnqmfy! The electric power, an energy source essentially required for the modern industry and living of people, is for the modern industry and living an energy source essentially required The electric power, growth and is increasing in proportion to economic and recycle. The consumption of power impossible to store income. increase of national national facilities to keep the security of power, to expand the power generation We do our best efforts facilities on the stable operation of power generation we operate our business focused infrastructure. In addition, generation cost. and reduction of power Qpxfs!Hfofsbujpo!Dbqbdjuz 611 2-611 2-111 3-611 4-611 5-611 3-111 4-111 5-111 Ƙ Energy Security Security Energy Ӥ Ӥ Ӥ Planned Facilities or Facilities under Construction

Items Names of power plants Expected completion day Fuels Facilities capacity (MW) Remarks Facilities under Samrangjin solar#2 2008. 4 Solar 1 Under operation construction Gunsan CC#1 2010. 5 LNG 718 Goduk CC 2011. 6 LNG 700 Joint project with private sector Yangju CC#1 2011.12 LNG 700 Joint project with private sector Garolim tidal power 2012.12 Tide 520 The biggest tidal plant in Korea Yangju CC#2 2013.12 LNG 700 Joint project with private sector Planned facilities Gunsan CC#2 2014. 2 LNG 700 Taean IGCC 2015. 9 Bituminous coal 300 First plant in Korea Taean thermal#9 2016.11 Bituminous coal 1,000 Taean thermal#10 2017.11 Bituminous coal 1,000 Wind power plants - Wind 9 Total 6,348

1) Above table is prepared based on the construction letter of intent and RPA (Renewable Portfolio Agreement) signed as a part of 4th power demand and supply plans.

ƜƜƜ Improving the Reliability of Facilities

Sustainability Report 2008 We have guaranteed the optimal operation of facilities and Ӥ Pqfsbujpo!fggjdjfodz 26 prevented the suspension of power plant by developing and )&* 81/1 operating the system, designed to detect and notify the 74/8 6:/2 6:/3 6:/4 causes for trouble in the real time, since incorporated under 71/1 61/1 the intention of accomplishing the decrease of unplanned loss 51/9 51/9 52/2 52/4 51/1 and zero defect. 41/1 Also, we have improved our power plant operation 31/1 technologies through the benchmarking of power plants 21/1 3115 3116 3117 3118 successfully operated in foreign countries. In addition, we Thermal efficiency Availability keep trying our best efforts to guarantee the stable supply of high quality power at low cost by checking up our facilities via an American EPRI expert and maintaining the optimal Ӥ Tvtqfotjpo!sftvmufe!gspn!uspvcmf )&* condition of power generation facilities by means of building 51/1 48 46 the preventive and corrective system designed to improve the 44 44 41/1 capacity and reliability of our facilities. In 2007, we increased the thermal efficiency of our power 31/1

generation facilities up to 41.26% by improving the efficiency 21/1 7 4 4 of power generation and operation system through the 2 1/1 optimal distribution of our management resources using 6 3115 3116 3117 3118 sigma management innovation technique and reinforcing the Number of units Number of cases performance of gas turbine installed and operated in our Seoincheon complex division. The thermal efficiency2) of our facilities is 0.43%p higher than the average ones (40.83%) of 3*!Thermal efficiency: The ratio of energy converted into thermal energy supplied to the thermal cycle other Korean power generations companies. In addition, the Qpxfs!hfofsbujpo!bnpvou!)lXi*!y!971!)ldbm0lXi* .!Dbmdvmbujpo!gpsnvmb!>!...... !ſ 211)&* thermal efficiency of our facilities is higher than the ones of Vtfe!gvfm!bnpvou!)lh-!m*!y!dbmpsjgjd!wbmvf!)ldbm0lh-!m*

other American (40.9%) and Japanese (34.0%) power 4*!Quoted from the 2007 KEPCO in Brief published by the KEPCO in May '08. generators3). Value Creation

We, as a public corporation, have fulfilled our liability to guarantee the stable power supply. Furthermore, we have developed the business models required for creating the new growth engine through the access to overseas market, diversification into related businesses to be ready for the rapidly changing future management environments. Also, we play the core role in the market as a professional clean energy company focused on renewable energy expansion and supply policies of Korean government by developing the diverse renewable energy sources.

ƜƜƜ Activating the Development of Overseas We signed the contract agreement with shareholders for the Business Philippine hybrid power generation project in Oct. 2007 and We incorporated KOWEPO International Corporation, our then expedited the development of renewable energy first overseas subsidiary, in Manila, the Philippines in Nov. businesses such as biomass and hydro power generation. 2007 for securing the bridgehead of overseas investment In addition, we do our best efforts to secure the future and development and then sent our 4 employees. growth engine by progressing other projects such as We plan to expand our business area into other countries construction of hydro power plant of 390MW in Laos and such as Far East and Central Asia by positively joining the coal burning thermal power plant of 400MW in Sumatra, overseas plant export policy of Korean government and Indonesia. supporting the Korean private companies.

27 Creative Energy Far East Asia

Vietnam

Philippine Laos Ukraine Lima

Pakistan Indonesia El Salvador

Nigeria

Ecuador

Chile

Laos Clark biomass(56MW) Ukraine combined cycle plant hydroelectric Limay LNG & combined cycle El Salvador (750MW) power plant power plant(620MW) (390MW) Kananbi hydro power plant(145MW) Nigeria Egbin Power plant O&M Sumatra, Indonesia KOWEPO International Ecuador Project Coal burning thermal Corporation (1,320MW) power plant(400MW) Philippine hybrid(30MW) Bangavellatong Chile Pakistan (50MW) Vietnam Far East Asia

Confirmed project Project under development Project to be developed ƜƜƜ Access to Power Generation Business and Related Businesses Construction projects such as Pocheon combined cycle power plant (1,500MW) construction project and Godeok combined cycle power plant (700MW) construction project are under Ӥ Qpxfs!Hfofsbujpo!Dpnqmfyft Dongducheon CC processing for the stable power supply in northern area of )4-111NX* Munsan CC Gyeonggi province and Seoul metropolitan area. We were )861NX* Yangju CC Cheongna and Gimpo CES )2-611NX* nominated as a contractor of Cheongna CES(community ):34Hdbm0i* energy supply system) project by making use of Seoincheon Geomdan New Town CES Godeok complex )561Hdbm0i* )811NX* combined cycle thermal power plant in Nov. 2004. We were Garolim tidal power plant CES in planned Pyeongtaek )631NX* internationalization nominated as a contractor of CES project in Shinhyeon, area)515Hdbm0i* Gajeong area in Sep. 2006. We started the supply of heat to IGCC Construction project Janggi area of Gimpo in Mar. 2008 after awarding this project )411NX* Saemangeum tidal Taean underground LNG power plant in Jan. 2007. Especially, we plan to start the Pyeongtaek and Storage project Samrangjin solar )521NX* (200 thousand ton) )4NX* Gunsan CES. We try to access to new businesses such as Gunsan CES )342Hdbm0i* storage facilities lease business and dividends generation business by progressing the underground LNG Storage project in our Taean power plant site. Sustainability Report 2008 28 ƜƜƜ Securing the Renewable Energy Confirmed project Project under development Project to be developed

We have signed the renewable portfolio agreement (RPA) Ƙ Above power generation capacities and power complex are with Korean government on Jul. 25th, 2005. We plan to calculated as of end of 2007. secure the renewable energy power generation facilities up to 118MW by making an investment of 178 billion won for 3 years. Also, we keep trying to develop the renewable energy source to be ready for the 2nd renewable portfolio agreement (RPA) to be effective for 3 years from the year of 2009 and RPS (Renewable Portfolio Standard) to be effective from the year of 2012.

Solar Photovoltaic Power Generation Our solar power generation facilities of 120kWp, completed ƣ Tbnsbohkjo!Tpmbs!Qipupwpmubjd!Qpxfs!Qmbou in our Taean power plant site for the first time in Korea in Aug. 2005, are under commercial operation. In addition, Samrangjin solar power generation facilities of 3MWp, the biggest solar power generation facilities in Korea, are under commercial operation.

ƣ Ubfbo!Tnbmm!Izesp!Qpxfs!Qmbou Tidal Power Generation The biggest tidal power plant in the world with ifs capacity of 520MW, in Garolim Bay has been progressed since the Garolim Tidal Power Generation Corporation was incorporated. We signed the contract agreement for the construction of tidal power plant with our contractor. In addition, we plan to progress the other tidal power plant construction projects in Saemangeum area and Hwaong ƣ Tjhofe! uif! dpousbdu! bhsffnfou! xjui! tibsfipmefst! gps! uif Qijmjqqjof!izcsje!qpxfs!hfofsbujpo!qspkfdu!)Kvm/!(18* area showing the excellent geographical conditions based on our experiences acquired through the construction of above project.

Integrated Gasification Combined Cycle Power Generation We started the design & technology service and environmental impact assessment in 2007 after signing the agreement for the construction of Taean#1 IGCC, Integrated ƣ Pvs!Qijmjqqjof!dpsqpsbujpo!pggjdf!xbt!pqfofe!jo!Gfc/!(19 Gasification Combined Cycle power plant construction project, with Korean government in Dec. 2006. We expedite this construction project by selecting the construction contractor and signing the license agreement for introducing the coal gasification process technology and securing the required right. In addition, we try to export the coal gasification plant to Asian areas such as Mongolia and Indonesia by localizing the relevant technologies. 29 Creative Energy

ƣ Tjhofe! uif! NPV! gps! uif! dpotusvdujpo! pg! dpbm! cvsojoh! uifsnbm qpxfs!qmbou!jo!Tvnbusb-!Joepoftjb!)Pdu/!(18* Fuel Cell Power Generation We currently survey the potential project site in our Seoincheon power complex site, where the heat generated upon power generation may be utilized, for the construction of big fuel cell power plant. This project is under processing for the goal of starting in 2008 and completing in 2009.

ƣ Hbspmjn!Ujebm!Qpxfs!Qmbou Technological Development

We operate our business focused on promoting the research and technological development, and increasing the investment for the purpose of developing the core technology, and creating the growth engine required for securing the superior market position in Korean power market. We have completed 73 new R&D Projects for the last 3 years including 20 new R&D Projects performed in 2005, 25 new R&D Projects performed in 2006 and 29 new R&D Projects performed in 2007. In addition, our R&D Investment has been 71% increased for the last 3 years. We plan to invest the amount of 39.55 billion won in 2008. Our R&D Action plan is focused on the areas of renewable energy, environment and general energy.

ƜƜƜ R&D Investment Status and Ratio ƜƜƜ Activating the Support to Small and Medium Sustainability Report 2008 Companies 30 41-7:2 We currently own industrial property rights such as patent 35-352 1/98& and utility model right up to 156. We have acquired the 377/6)48/5੏* 33-381 2:5/1)86/:੏* industrial property rights up to 54 since separated from 1/91& KEPCO. We have transferred 31 industrial property rights to

221/4)61/4੏* 19 small and medium companies as a part of efforts to support for the activation of small and medium business. 1/61& Also, we try to enable the small and medium companies to 3116 3117 3118 utilize the industrial property rights by recording 10 R&D Investment (amount increased for last 1 year) industrial rights in Korea Technology Exchange, Project to be developed Confirmed project professional technology transfer agency.

Ӥ Ufdiopmphz!usbotgfs!sfdpset ƜƜƜ Our Important R&D Accomplishments )Voju;!Dbtf* 42 Items Technologies to develop 41 Development and localization of Korean type 36 CCT Technologies IGCC (300MW) Plant design technology 31 27 Development of 250KW MCFC (melting carbonate Hydrogen and fuel cell 26 fuell cell) 21 Development of integrated thermal power plant 21 New I&C System technology 5 monitoring system 6 2 1 Development and actualization of high efficiency CO2 capture and storage technology 1 absorption technology 3114 3115 3116 3117 3118 Upubm

Ӥ Joevtusjbm!Qspqfsuz!Sjhiut!pxofe!cz!Pvs!Dpnqboz

Items Before being separated from KEPCO 3114 3115 3116 3117 3118 Total Patent 99 1 1 3 26 22 227 Utility model right : 1 22 1 1 8 38 Design and trademark 6 2 7 2 1 1 24 Total 213 2 28 4 26 29 267 Creative Energy 31 We introduced new proposal system that the bottom-up innovation activities based on the voluntary participation. We keep increasing the number of proposals up to 3,340, 5,518 and 7,070 in 2005, 2006 and 2007 respectively by activating and 7,070 in 2005, 2006 and 2007 respectively proposal the proposal by means of developing the web-based management system designed to guarantee the real time submission and examination of proposal. New Proposal System (Click & Suggest Now) New Proposal System (Click & Suggest Evaluation of Improvement Activities and Compensation for Accomplishment Each improvement project or issue is evaluated and compensated through the management evaluation system and comprehensive accomplishment compensation system. We prevented the complaint on compensation for accomplishment by stipulating the comprehensive accomplishment compensation regulations in Dec. 2005. Improvement Activities Performed by Each Activities Performed Improvement Quality Group introduced since Our quality group activities have been solved through the 1970s. 508 projects or issues have been work, facilities bottom-up activities, focused on assigned and site. Hfofsbuf!uif!LQJ Qsphsftt!uif!CTD!Tusbufhz Fwbmvbujpo!boe!dpnqfotbujpo!gps bddpnqmjtinfou Performing the Long-term Innovation the Long-term Performing the KPI and Generating Strategy Jnqspwfnfou!Bdujwjujft!Nbobhfnfou!Tztufn All our employees actively participate in the innovative activities, progress the BSC Strategy and generate the KPI progress the BSC Strategy and participate in the innovative activities, All our employees actively showing the improvement activities for the projects of accomplishment. We perform for the continual generation and proposal sigma, quality improvement activities, accomplishment through the 6 the possibility of short-term activities. and fair through the objective evaluation the work capacity of our employees Also, we keep improving activities. system by promoting the innovative performed works and operate the improvement compensation for the Ɯ Ɯ Ӌ7!tjhnb! ӋRvbmjuz!jnqspwfnfou ӋQspqptbm!bdujwjujft 6 Sigma Improvement Activities 6 Sigma Improvement end of 2007 by We have improved 222 items at the sigma, top-down comprehensively progressing the 6 since 2005. improvement activities focused on the manager, requirements 6 sigma GB Certificate is the qualification when examining the promotion of each employee. We decide the long-term management direction and We decide the long-term management of management strategy through the SWOT analysis systematically environments and clearly define and projects and progress the annual business goals, strategic of each team or Key Performance Index(KPI) in the unit organization. Ɯ Management Innovation Management Ӥ Important Management Accomplishments

We do our best efforts to overcome the change in management environment and create the future growth engine by preparing the long-term financial plans linked to our management strategy, Vision 2020. We pursue the maximization of corporate value by accomplishing the goals of each strategic project or issue. In this regard, we decided on our definite financial goals for the fiscal year of 2020 such as sales of 5 trillion won, debt ratio of 50% and overseas business proportion of 20% by building the long-term management forecasting system in Oct. 2007. Our directors or executive officers monitor the financial effects resulted from the changed management environment using the long-term management forecasting system and reflect the monitoring result upon decision making.

ƜƜƜ Financial Accomplishments The EBITDA (earning before interest, tax, depreciation and Our total assets were recorded as 3.8851 trillion won as of amortization) showing the cash generation capacity of Sustainability Report 2008 end of 2007. Our total assets were 5% increased by the corporate was 32% increased and recorded as 615.5 billion 32 increase of sales receivables and fixed assets such as won as of end of 2007. The EBITDA Margin (EBITDA/sales) machinery and equipment. Our debt was 4% increased by was recorded as 7.2% as of end of 2007. The ROE and ROA the increase of accounts payable, so our debt was recorded were recorded as 7.2% and 4.5% respectively as of end of as 1.4589 trillion won as of end of 2007. Our capital was 5% 2007, so these financial indexes show the stable profit increased, so our capital was recorded as 2.4262 trillion structure and cash flow. won. The debt ratio and DEBT/capital were recorded as 60.1% and The sales of 3.691 trillion won, operating profit of 264.2 27.3% respectirely as of end of 2007. The borrowing interest billion won and net income of 174.8 billion won were 27%, rate was continually improved, so the stable financial 17% and 10% increased respectively as of end of 2007. structure was maintained.

Ӥ Qspgjubcjmjuz!joefy 33/7 36 2:/3 31/2 31

26 9/3 7/: 8/3

)Voju;!1/2!cjmmjpo!xpo* 6 6/6 5/4 5/6 Items 2006 2007 Increase rate 1 3116 3117 3118 Current assets 5,248 6,071 16% FCJUEB!NBSHJO SPF SPB Assets Fixed assets 31,831 32,780 3% Sub total 37,079 38,851 5% Ӥ Tubcjmjuz!joefy Current debt 5,147 5,430 5% 81 Debts Fixed debt 8,914 9,159 3% 72/2 71/2 71 Sub total 14,061 14,589 4% 59/5 Capital stock 1,760 1,760 61 51 Earned surplus 8,583 9,818 14% 41/5 Capitals 36/3 38/4 Others 12,674 12,684 41 Sub total 23,017 24,262 5% 31

Sales 24,241 30,691 27% 21 5/: 5/8 5/7

Gross margin 2,596 3,004 16% 1 Operating profit 2,264 2,642 17% 3116 3117 3118 Net income before corporate tax 2,204 2,362 7% Efcu!sbujp EFCU0DBQJUBM Cpsspxjoh!joufsftu!sbuf Net income 1,596 1,748 10% Fdpopnjd!Bddpnqmjtinfout!boe!Gjobodjbm!Sbujpt ƜƜƜ Distribution of Economic Accomplishments

Ӥ Xbhf!boe!xfmgbsf )Voju;!1/2!cjmmjpo!xpo* Ӥ Sfwfovf Items 3116 3117 3118 )LSX!Cjmjpo* Wage 9:9 :24 2-165 4-611 4-17: Severance and retirement benefits :1 22: 215 4-111 Welfare expenses 3-535 52 53 45 3-611 3-338

3-111 The company paid the amounts of 105.4 billion won and 3.4

2-611 billion won as the wages and welfare expenses respectively

2-111 as of end of 2007.

611 Ӥ Dbqjubm!dptut!)ejwjefoe!boe!joufsftu*! )Voju;!1/2!cjmmjpo!xpo* 1 3116 3117 3118 Item 3116 3117 3118 Dividend Ӥ FCJUEB 681 624 7:: Interest 418 4:7 588 )LSX!Cjmjpo* 811 727 The company paid the amount of 69.9 billion won, to its 711 615 shareholders as the dividend. Also, the company financed 576 611 the required fund and issuing the corporate bond for the 511 expansion of facilities and paid the amount of 47.7 billion 411 won as the interest as of end of 2007. 311

211

1 Ӥ Ubyft!)dpsqpsbuf!uby-!jodpnf!uby!boe!sfbm!ftubuf!uby*! 3116 3117 3118 )Voju;!1/2!cjmmjpo!xpo*

Item 3116 3117 3118 Corporate tax 614 717 793 Ӥ Dpwfsbhf Income tax 87 88 :2 )Ujnft* Real estate tax 5 7 5 33 : 9/4 Creative Energy We faithfully perform the tax liability stipulated in the 6/6 applicable laws by fully paying the corporate tax of 68.2 7 6/8 billion won, as of end of 2007.

4 3/3 2/6 2/6 Ӥ Jowftunfou!gps!uif!Mpdbm!Tpdjfuz!)tqpotpstijq!boe epobujpo*! )Voju;!1/2!cjmmjpo!xpo* 1 Items 3116 3117 3118 3116 3117 3118 Working expenses for the support of local society 2:6/6 :9/3 88/4 FCJU0Hsptt!joufsftu!fyqfotf Efcu0FCJUEB Severance and retirement benefits 26/7 29/7 2:/: Ӥ Mfwfsbhf Welfare expenses 24/6 6/25 6/38

)&* We, as a public good oriented corporation, do our best 61 54/7 48/7 efforts to completely perform the social responsibility. 51 44/8 41/5 38/4 )Opuf*!Bnpvou!pg!tvctjejft!qspwjefe!cz!uif!hpwfsonfou!)uby!fyfnqufe* 41 36/3 Ӌ3116!;!Uif!tvctjez!pg!3/:!cjmmjpo!xpo!xbt!qspwjefe!cz!uif!hpwfsonfou!up 31 jnqspwf!uif!cjmm!tztufn-!jowftu!gps!uif!fowjsponfoubm!gbdjmjujft!boe 21 jodsfbtf!uif!fnqmpznfou/ Ӌ3117!;!Uif!tvctjez!pg!83/64!njmmjpo!xpo!xbt!qspwjefe!cz!uif!hpwfsonfou!up 1 jowftu!gps!uif!fofshz!tbwjoh!gbdjmjujft/ 3116 3117 3118 Ӌ3118!;!Uif!tvctjez!pg!2/7!cjmmjpo!xpo!xbt!qspwjefe!cz!uif!hpwfsonfou!up Efcu0frvjuz Efcu0dbqjubj jowftu!gps!uif!fofshz!tbwjoh!gbdjmjujft/!

Clean Energy

We will become the clean company handing over the clean and beautiful natural environment to our descendants as your eco-friendly partner preserving the clean environment./

Environment & Energy 36 Sustainability Report 2008 Ӥ vision ofeco-power3plus10. accomplish onorbefore2020undertheenvironmental greenhouse gasandpollutantsbydecidingthegoalsto We keepperformingtheactivitiesrequiredforreducing environment preservationandlocalsociety. management policyofpursuingtheharmonywith management systemfocusedontheenvironmentunder sustainable managementandoperatetheenvironment environment managementasthetoppriorityofour We, KoreaWesternPowerCo.,Ltd.,considerthe Clean Energy projects orissues Strategic projects Environmental your eco-friendlypartnerpreservingthecleanenvironment. We willbecomethecleancompanyhandingoverandbeautifulnaturalenvironmenttoourdescendantsas Environmental Vision Progressing 4 Strategies Vision goals or issues vision Ӌ Ӌ Ӌ Ӌ change andpreservethe Overcome theclimatic environment. the global required forpreserving Develop thetechnology advance. professional capacityin Secure the emission. decreasing thecarbon source focusedon Actualize thepower the KyotoProtocol. required formeeting Build thefoundation natural environment. Our toppriorityistoguaranteethesustainablemanagement. Ӌ Ӌ Ӌ Ӌ impact. the environmental required fordecreasing Develop thetechnology technology. Improve thecombustion environmental facilities. Expand andimprovethe management system. environment Build theglobal emission ofpollutants. Guarantee thezero 38 projectsorissuestoprogressineach area Eco-power 3plus10 We significantlydecreasetheemissionvolumeofNO role inpreservingtheenvironmentsfuture. intention topreservetheenvironment.Wewillplaycore technological development,investmentandourstrong All aboveaccomplishmentsareresultedfromourcontinual efforts. 0.668g/kWh to0.296g/kWhforlastyearthroughaboveour Ӌ Ӌ Ӌ Ӌ Environment management system. chemical analysis Build theprecise friendly technology. Develop theneweco- byproducts. Actively recyclethe sustainable energy. Increase theuseof focused onnatural circulation. Ӌ Ӌ Ӌ Ӌ Opening ofenvironmental drained water. Actively recyclethehot public petition. the clearhandlingof petition andguarantee Prevent thepublic preservation activities. Practice theenvironment information. Open theenvironmental information andsocial contribution X from Clean Energy 37 Secure the professional capacity in advance. liable burdens. Greenhouse Gas Inventory Verification Statement qpxfs!hfofsbujpo!dpnqbojft-!rvpufe!gspn!uif!tubujtujd!ebub Op/!88!pg!LFQDP!)3118*/ 2*!Qsfqbsfe!cbtfe!po!uif!bnpvou!pg!qpxfs!hfofsbufe!cz!uif Ӥ Prepare for the expected by operating the thermal power plants are sensitive to by operating the thermal power plants the emission of climate change. We keep trying to reduce to overcome the greenhouse gas by preparing the strategy infrastructure. climate change and building the required by signing the Also, we try to secure the emission right Exchange as a emission right trading MOU with Korea Power greenhouse gas part of efforts to build the foundation of to overcome the trading system expected as a means climate change. ȸȶ Goal Actualize the power source focused on reduction of carbon emission. Actualize the power source focused on reduction of carbon emission. Actualize the power business guaranteeing the continual growth Actualize the power business guaranteeing the To be ready for meeting the requirements for the Kyoto Protocol. Develop the optimized greenhouse gas treatment technology. Build the foundation required for guaranteeing the power business focused on reducing the carbon emission. Build the foundation required for guaranteeing Kyoto mechanism Building the Greenhouse Gas Inventory System Gas Inventory Building the Greenhouse Climate change overcoming strategy The energy consumption pattern is changing when the industry is developing and national income is increasing, so is developing and national income pattern is changing when the industry The energy consumption convenient to the electric power is safer and more electric power is getting increased because the consumption of oil and gas is burning the fossil fuels such as coal, The thermal power plant operated by use than 1st energies. solved for This social issue must be critically social issue in terms of climate change. emerged as a critical management of each company. guaranteeing the sustainable Ɯ Ɯ Correct greenhouse gas emission volume must be surveyed to reduce the emission of greenhouse gas. We prepare the greenhouse gas emission volume inventory report by installing the greenhouse gas emission volume inventory system meeting the requirements for the international standards. We secure the objectivity of greenhouse gas emission volume by acquiring the certificates of our 2004, 2005 and 2006 greenhouse inventory reports from the CDM Certificate Agency and DNV Korea, professional certification agencies and then utilize the certificates for our climate change policies. Our greenhouse gas inventory control procedures and guide systems are under development and installation in 2008. We plan to operate these systems in 2009. Ɯ Climate Change and Energy Energy and Change Climate 12.1% in Korean We are occupying the market share of facilities are power market. 86% of our power generation as coal, oil and operated by burning the fossil fuels such generation are gas. All bituminous coals used for the power Indonesia. The imported from Australia, China and oil are supplied petroleums such as heavy oil and diesel procedures and through the domestic and overseas bidding signed with Korea LNG is supplied by long-term agreement most of powers Gas Corporation. Our company generating Ӥ 38 Sustainability Report 2008 Ejftfm!pjm!boe!lfsptfof (Unit: ThousandtonCO 51-111 41-111 61-111 31-111 21-111 Ӥ Ӥ Ӥ (Unit: GJ/MWh) Fmfdusjd!Qpxfs :/1 9/9 9/7 9/: 9/6 9/8 62-4:6)23&* :1-:49)32&* Amount ofEnergesUsedforEachFuel Greenhouse GasEmissionVolumesofEachYear Energy consumptionofbasicunit 1 Ifbwz!pjm 457)1/2&* 8-823)3&* :12: 1131 173118 3117 3116 3111 2::6 2::1 MOH 5-293 3116 9/:1 2 -eq) 25-198 Indirect energies:7,712 Direct energies:420,630 Total energies:428,342

31-193 (Unit :GJ) 3117 9/94

38-261 3118 9/8: 38-432 388-:62)76&* Cjuvnjopvt!dpbm

45-412 Cjuvnjopvt!dpbm Ӥ Ӥ Ӥ (Unit: g-CO 811 761 861 36-745)86&* greenhouse gasinventoryreport Standards applicableuponpreparingthe Greenhouse gasemissionofbasicunit Greenhouse gasemissionvolumeofeachenergysource preparing thegreenhousegasinventoryreports. and quantityofheatnoticedbythegovernmentwhen reporting standardpublishedbytheWRIandWBCSD, greenhouse gasprotocol,acorporateaccountingand greenhouse gasinventoriespublishedin1996, We havereflectedtheguidelinesfornational 2 /MWh) 3116 831 Indirect energies:363 Direct energies:33,938 Total energies:34,301 ) Unit: ThousandtonCO2-eq 3117 822 Goal fortheyearof2020 * 3118 815 474)2&* Fmfdusjd!Qpxfs 5-686)24&* MOH 4-817)22&* Ifbwz!pjm 34)1/2&* lfsptfof Ejftfm!pjm!boe Clean Energy 39 2 2 Treatment Technology Treatment 2 separation dry recycling absorbent, 2 absorption tower fluidized bed process, mass 2 Efforts to Decrease the Greenhouse Gas Gas the Greenhouse to Decrease Efforts Securing the Carbon Emission Right and for Required Building the Foundation Joining the Carbon Market Ɯ Ɯ Ɯ Ɯ waste gas CO oxygen particle production technology and IGCC oxygen particle production technology Commercialization technology 2005 thru 2007. eq in 2007. Development of CO Development billion won for We have invested the amount of 7.32 developing the CO 5th day and 2nd day-no-driving system We keep trying to save the energy and reduce the greenhouse gas by performing the 5th day and 2nd day-no- driving system, operating the commuting bus for our employees and controlling the travel on duty. Ɯ We positively join the clean development mechanism project and greenhouse gas reduce recording program to be ready for the global greenhouse gas regulation enforced based on the market mechanism. We expect to show our strong intention to reduce the greenhouse gas emission and be ready for the carbon market regulations through these our efforts. We secure the credit up to 222 thousand ton - CO Ɯ to as the country enforced Korea is not classified Currently, gas. However, we faithfully decrease the greenhouse projects such as improving the perform the practicing facilities and development of efficiency of power generation the greenhouse gas by playing our technology to decrease to prepare for the climate change in roles as the agency circumstance of enforcing the consideration of actual gas emission. decrease of greenhouse Saving Project Energy of power generation industry is The energy consumption and closely related to the management accomplishments saving. We operate climate change protocol rather than cost consumption our business focused on decreasing the energy agreement and by signing the voluntary energy saving reporting the energy saving records. of 19,948 ton - CO We annually reduce the greenhouse gas in the Pyeongtaek eq by replacing the facilities operated to save the power generation division with draft fan designed the rpm energy consumption by automatically controlling according to load. eq/year 2 power generation project eq/year 2 eq/year 2 Expected CERs amount: 2,215 ton - CO Progressing status: Applied to the UN CDM EB (national approval was completed) Effective term of project: 2009. 1. 1 thru 2018. 12. 31 (10 years) Number of units to install: 12 units Investment: About 8.6 billion won Construction period: 2004 thru 2007 Expected energy saving amount: 28,766 MWh/year (calculated based on the VFD installation operation accomplishment report) Reduced amount of greenhouse gas: 19,948 ton - CO Investment: About 180 billion won Investment: About 180 billion amount: LNG 47,505 ton Expected energy saving plans) (calculated based on the business gas: 0.222 million Reduced amount of greenhouse ton - CO Combined cycle efficiency: 50.25% (3%p improved) Combined cycle efficiency: kW (10% improved) Combined cycle output: 254,520 decreased) NOx emission: 15ppm (75% Project name: Samrangjin solar photovoltaic Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Samrangjin solar photovoltaic power plant CDM Project progressing status Pyeongtaek thermal power plant draft fan (FDF and Pyeongtaek thermal power plant draft fan (FDF GRF) and automatic controller installation(VFD) project Seoincheon combined cycle power plant combined cycle power Seoincheon through the improvement project performance high efficiency gas turbine adoption of ӈ Ӥ Ӥ Ӥ 40 Sustainability Report 2008 thousand ton-CO emission rightafterreducingthegreenhousegasupto222 We acquiredtheprofitof1.1billionwonbyselling greenhouse gasofindustry. for theinternationalCDMProjectandreducing government forthepurposeofmeetingrequirements project recordingandmanagementsystemoperatedbythe We haveactivelyjoinedthegreenhousegasreduction Greenhouse GasReductionProject Registration andManagementofGlobal 6,723 ton-CO We expecttoannuallyreducethegreenhousegasup Progressing theUNCDMProject two projectsareplannedtobecompletedin2012. power generationfacilitiesareunderconstruction.These biggest tidalpowerplantintheworld,andIGCC(300MW) Furthermore, Garolimtidalpowerplantof520MW,the Aug. 2005andSep.2007respectively. Samrangjin solarphotovoltaicpowergenerationfacilitiesin small hydropowergenerationfacilitiesincludingthe photovoltaic powergenerationfacilitiesof120kWandTaean 2 eq for10yearsbycompletingthesolar 2 eq in2007throughaboveefforts. Ӥ Ӥ ӈ ӈ progressing status Domestic greenhousegasreductionproject Status Taean SmallHydroPowerCDMProjectProgressing Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Project name:Taeansmallhydropower Project name:Seoincheoncombinedcyclepower 460 thousandton-CO Expected amounttobeadditionallyreduced:About 1.1 billionwon(2007) Profit acquiredbysellingtheemissionright:About (10 years) Effective termofproject:2009.1.1thru2018.12.31 ton -CO Reduced amountofgreenhousegas:222thousand ton/year calculatedbasedonthebusinessplans Expected energysavingamount:LNG47,505 Project registration:Jun.2006(firstprojectinKorea) business plan processing Progressing status:Feasibilitystudyisunder Expected CERsamount:4,508ton-CO first timeinKoreaNov.2007) (Acquired thegreenhousegasemissionrightfor 2 eq/year generation project efficiency gasturbine project throughtheadoptionofhigh plant performanceimprovement 2 eq calculatedbasedonthe 2 eq/year Clean Energy 41 48,728GWh 46,987GWh Power Power Power amount amount generation transmission nitrogen oxide of machineries and tools in indoor area 25 67 67 100 Silencer, soundproof wall and installation Recycling rate (%) Switch Power transmission tower Coolant pump Denitrification facilities designed to reduce the emission of Denitrification facilities designed to reduce the Generator 6 712 744 460 Coal ash buried and reused Main transformer Steam condenser Turbine 15.4 thousand ton 14.4 thousand ton 0.98 thousand ton (thousand ton) 34,301 thousand ton Recycled amount ȶ ȶ Substation ٧

Boiler

٨ ȶ X 2 X ȶ Air blower SO CO NO Dust 24 460

1,059 1,114 Pollutants emitted to the air

emission of dust

ȶ Electric precipitator ȶ wastewater Flue gas desulfurization facilities designed to reduce the sulfur oxides Flue gas desulfurization facilities designed to reduce designed to reduce the the generated

(thousand ton) ȶ Generated amount Wastewater treatment plant designed to purify ȶ Items Wastes Coal ash recycled gypsum is Wastewater completely Desulfurization ٦٦ Desulfurization gypsum kl 1,666 1,234 11,028 9 thousand thousand kl thousand ton thousand ton Chemicals Limestone 283 thousand ton 7,181 thousand ton coal LNG 16,320 thousand ton Electric Power Generation Cycle Heavy oil Kerosene The power generation company inevitably uses huge amount of resources and generates the pollutants because of of resources and generates the pollutants company inevitably uses huge amount The power generation and element essentially required for the abundant living The electric power is an element industrial characteristics. of fossil fuel and environmental disruption. the environments through the depletion critically influencing managing the society by recycling the resources, to sustainable growth of our We are to make a contribution the resource cycling system. pollutant and operating Power generation fuels Bituminous Power generation water Diesel oil and Ӥ Utilizing the Resources and Minimizing and Resources the Utilizing of Pollutant the Generation Ӥ Environment management systematic diagram ƜƜƜ Preserving the Environment Using the Environmental Management System (EMS) Ӌ Evaluate the environmental noxious. We do our business focused on environment, perform the Ӌ Prepare the environment management environment management protocol by processing PDCA progressing plans. Ӌ Prepare the environment education plans. cycle and acquire the ISO14001 certificates. Also, we annually perform the environment auditing with the intention of minimizing the potential environment risk by QMBO Ӌ Director or executive officer Ӌ Inspect and check the effectively operating the environment management system. reviews the environment environment management management plans BDUJPO FNT EP activities Ӌ Find an alternative to Ӌ Ask the corrective actions Improving the Reliability by Opening the continually improve the Ӌ Fnvironment auditing Environmental Information environment DIFDL We keep measuring the air and water by quality measuring system and then send the measured results to the Ӌ Environment education and training environment relevant agencies and local government. We Ӌ Prepare the environment manual and guideline guarantee the easy access to environmental information by Ӌ Perform the environment management plans. opening all information to local residents through the electronic display board. Environment Management Policies

Effort to Minimize the Environmental Pollution We, Korea Western Power Co., Ltd., make a contribution to growth of society by generating the best energy in harmony with human, technology Sustainability Report 2008 by Observing the Environmental Laws and environment. Also, we make a contribution to happiness and 42 Our Taean, Pyeongtaek and Seoincheon power generation prosperity of human being by generating the eco-friendly power as a market leader in 21st century. We decide our three environmental division signed the environmental protocol with local policies focused on clean, clear and comfortable power and stipulate our environment management policies as follows as a part of our effort to governments for the voluntary environment management. accomplish our goal of World Best 3E (energy, environment and We try to minimize the environmental pollution by deciding expertise) Creator: 1. We decide the eco-power 3 plus as our environmental vision for the control standards applicable to air and water pollutant minimizing the impact to environment and actualizing the (keep the level of 30% against the legal standards) and sustainable growth. 2. We do our best effort to preserve the global environment by wastes (recycling goal of above 70%). installing the system meeting the requirements for the international standards and periodically performing the environmental impact assessment against all our power generation processes. 3. We minimize the generation of environment pollutants, observe the national standards and environmental laws and stipulate the control ƜƜƜ Minimizing the Emission of Air Pollutants standards for all our power plants. 4. We continually develop and apply the technologies for the optimal While the thermal power plant operated using the coal and operation and improvement of environmental facilities. oil emits the sulfur oxides, nitrogen oxide and dust, gas 5. We operate the power plants focused on natural cycling by minimizing the generation of wastes and recycling the resources. power plant using the natural gas emits the nitrogen oxide 6. We open all environmental information and reinforce the cooperative system with local society to guarantee the clear and objective only. We minimize the emission of air pollutant by improving environment management. All employees including the CEO shall recognize the importance of the reliability of preventive facilities by deciding the strict environment management and take the required actions to faithfully control standards. perform this environment management policy. Sep. 2007 Restraining the Generation of SOx and NOx Son Dong-Hee, CEO & President, Korea Western Power Co., Ltd. We install and operate the preventive facilities such as cutting-edge flue gas desulfurization facilities, flue gas denitrification facilities and high efficiency electric precipitator. We minimize the emission of air pollutant by installing the NOx combustor designed to minimize nitrogen oxide because the commissioning was conducted against the desulfurization facilities of Taean Thermal Power Plants No. 7 and 8, so this increase is a temporary phenomenon. It is

expected to be reduced when the operation of facilities is ƣ Flue gas desulfurization (FGD) facilities stabilized. Ӥ Flue gas denitrification process Restraining the Generation of Dispersing Dust ӈ Flue gas denitrification facilities ;! We prevent the dispersing dust from being generated in our This system, designed to discharge the NOx after Taean power plant, operated by burning the coal as a fuel, by separating the NOX into nitrogen and oxygen under the natural condition by passing the NOx through the catalytic planting the windbreak forest, operating the motor sprinkler layer using the selective catalytic reduction method, is and installing the dustproof wall through the investment of operated in our Taean power plant and Pyeongtaek power 11.3 billion won. plant after the installation.

Bnnpojb Jokfdujpo ƜƜƜ Preservation and Saving of Water Resources ȶ The waters used by our company are classified into power Fdp generation water directly used for the power generation, Cpjmfs desulfurization water supplied to the desulfurization

TDS facilities, coolant and potable water. The power generation water is supplied from the fore-bays such as dam or lake around the power plant. We control the amount of water BI when collecting the water from the fore-bay so that the FQ surrounding water system may not be influenced. However, we reuse and discharge all waste waters, GHE Tubdl GE!Gbo generated upon power generation, after treating the wastewater up to 3rd class2) in order to reduce the use of water resource and minimize the impact to water system. Our Taean power generation division reuses most of wastewater and Pyeongtaek power generation division Ӥ Air pollutants emitted for each year including the Seoincheon power generation division located (Unit: g/KWh) in the coastal area try to prevent the water pollution and

1/9 minimize the impact to ecosystem by discharging the 1/783 1/779 1/8 wastewater at ordinary temperature. 1/7 43 1/6 Clean Energy 1/428 Reuse of Power Generation Water 1/5 1/422 1/394 1/4 1/3:7 We have prepared and performed the wastewater reuse 1/3 action plan to increase the wastewater reuse rate up to 80% 1/2 1/139 1/138 1/131 from 2001 to 2010 for the effective use of industrial water 1/1 3116 3117 3118 and securing the required water.

NOx SOx Dust We keep progressing the zero leakage movement, activating the reuse of wastewater and improving the wastewater treatment process for accomplishing above goal. Also, the wastewater reuse rate is improved a little as compared with the once recorded in 2006 because the construction of Ӥ Water use status wastewater treatment facilities is completed in our Taean Pyeongtaek Seoincheon Items Taean Div. Div. Div. power generation division. Supply capacity 106.6 180.0 980,106.0 (Mil. ton/year) Used amount 4.7 2.0 0.5 (Mil. ton/year)

Boryeong Namyang Fore-bay Paldang Dam Dam Lake

(Supply capacity: Amount of water supplied by each fore-bay) 3*!4se!dmbtt!xbufs;!Ju!nfbot!uif!xbufs!nffujoh!uif!sfrvjsfnfou!gps!uif!DPE )Difnjdbm!Pyzhfo!Efnboe*!pg!qI!7/6!!9/6!boe!dpoubjojoh!uif!tvtqfoefe tpmjet!pg!cfmpx!36nh0m/ 44 Sustainability Report 2008 ƣ be low. 4*!Rvpufe!gspn!uif!Dpotusvdujpo!qspkfdu!fowjsponfoubm!jnqbdu!bttfttnfou!sfqpsu!! 100% astherawmaterialofcementandgypsumboard. business recession.Thedesulfurizationgypsumisrecycled decreased becauseofdemandresultedfromthe completed andoperated.However,therecyclingrateis coal ashisincreasedwhentheadditionalfacilitiesare 67.3% in2005,2006and2007respectively.Thegenerated recycling rateofcoalashisrecordedas75.2%,68.9%and concrete admixture,cementrawmaterialandfilldirt.The The ashgeneratedwhenburningthecoalisusedas at normallevel. However, thegeneratedandrecycledwastesaredecreased Taean thermalpowerplantsNo.7and8wasstarted. wastes wereincreasedin2006whentheconstructionof with theonesrecordedin2006.Thegeneratedandrecycled recorded as23,700tonanddecreased49.5%compared Total wastesdischargedbyourcompanyin2007were of treatmentcompaniesinourhomepage. companies. Weopenthename,phonenumberandcapacity treatment ofthesematerialstotheauthorized materials aredifficulttoberecycled,soweaskthe appropriate treatment.Thewastesorwastelagging We recyclethecoalashanddesulfurizationgypsumfor Ɯ of seawaterisincreasedabove1 plant drainsthehotwater,areawheretemperature to powergenerationamount.Althoughourthermal This hotdrainwaterisincreasedordecreasedinproportion the coolanttocondensesteam,sohotwaterisdrained. through thecondensingprocess.Theseawaterisusedas and highpressuresteamthenreusestheused The thermalpowerplantgeneratestheusinghot Management ofHotDrain Water 1.5km Ɯ Ɯ Wastewater treatmentfacilities Recycling theWastes andBy-products 3) , sotheimpacttomarineecosystemissurveyed is withintherangeof ƣ Wastewater reclamationandusingsystem (Thousand ton) (Thousand ton) Ӥ Ӥ 5-111 4-111 6-111 3-111 5-611 4-611 3-611 2-111 2-611 911 711 511 611 411 611 311 811 211 Water usestatusrecordedforeachfore-bay Waste recyclingstatus 1 1 Recycling amount(Thousandton) Paldang dam(Seoincheon) Boryeong Dam(Taean) ƣ 3116 3116 De-nitrification facilities 3117 3117 Used amountofbasicunit(L/MWh) Namyang Lake(Pyeongtaek) Recycling rate(%) 3118 3118 *0NXiט( 21/1 31/1 41/1 51/1 61/1 71/1 81/1 91/1 1 )&* 1 31 51 71 91 211 231 251 271 291 Ӥ Places where the chemicals are used

Names of chemicals Used places Names of chemicals Used places

Ӌ Used for producing the power generation water in Hydrochloric water treatment plant. Hydrazine Ӌ Boiler water treatment: To prevent the corrosion. acid Ӌ Condensate polishing plant used for purifying the Ammonia Ӌ Denitrification facilities: Reducing agent Caustic soda boiler water. Phosphoric acid soda Ӌ Wastewater treatment plant: Control the pH.

Ӌ Water treatment plant: Used for producing the Sodium carbonate Coagulation aid power generation water. Ӌ Desulfurization wastewater treatment: To remove Sodium sulfite Aluminum sulfate Ӌ Wastewater treatment plant: Remove the turbidity the heavy metal and COD. Hydrochloric acid sodium element. Ӌ Coolant sea water treatment: To prevent the Antifoaming agent Ӌ Used for removing the foam in drain outlet Ferrous sulphuric acid corrosion. Chlorine dioxide Ӌ Used for the disinfection of potable water. Microbe spawn material Ӌ Sewage treatment: To remove the BOD.

Ӥ Wastewater generation and recycling status ƜƜƜ Minimizing the Use of Chemical Substances

(ton) )&* The power plant uses 30 different types of chemicals for 71-111 211 operating the environmental pollutants preventive facilities, 58-:74 61-111 91 preventing the corrosion and producing the power 75/2 51-111 generation steam. 66/5 41-861 71 We prepared the long-term chemicals management plans 41-111 34-844 51 26-22: under the goal of reduction the use of chemicals up to 30% 31-111 37/2 31 for the purpose of effectively using the chemicals and 21-111 9-48: 7-315 minimizing the use of chemicals in Aug. 2001. 1 1 3116 3117 3118 In this regard, we keep trying to minimize the use of Generated wastes Recycled wastes Recycling rate (%) chemicals by preventing the injection of hydrazine, using the high efficiency cohesive agents, improving the facilities Ӥ Coal ash generation and recycling status maintenance method and developing the process to replace. (ton) )&* However, the use of chemicals has been temporarily 2-311-111 211 2-16:-345 increased because the construction of Taean thermal power :15-252 45 2-111-111 86/3 91 989-:21 plants No. 7 and 8 is completed and denitrification facilities Clean Energy 79/: 78/4 911-111 823-698 including the desulfurization facilities are installed and 772-254 734-3:9 71 711-111 operated in our Pyeongtaek power generation division. 51 511-111 However, we plan to reduce the use of chemical through the 31 311-111 effort to minimize the use of chemicals. We do not commit

1 1 any accident resulted from the leak of noxious material 3116 3117 3118 when generating the power. Generated coal ash Recycled coal ash Recycling rate (%)

Ӥ Chemicals use status

(ton) )h0lXi* 29-111 1/51

27-111 1/46 1/446 27-431 25-111 1/41 23-111 1/36 Ӥ Long-term chemicals reduction plans 21-111 1/325 1/31 1/295 9-111 9-347 ӋPlan to introduce the latest water treatment technologies such as no 7-:59 1/26 7-111 injection of hydrazine and oxygen treatment 1/21 5-111 ӋPlan to develop and apply the process to replace the chemicals by

3-111 1/16 changing the cohesive agents

1 1 ӋPlan to change the facilities preservation method 3116 3117 3118 ӋPlan to improve the process Amount of used chemicals (ton) Used amount of basic unit (g/kWh) Ӥ Accomplishments Acquired through the Environmental Impact Assessment

Areas Business places Descriptions Duration Gunsan combined cycle Environmental impact assessment for the construction project 2005. 10 ~ 2007. 7 Construction area Garolim tidal Environmental impact assessment for the construction project 2006. 3 ~ 2008. 1 Taean IGCC Environmental impact assessment for the construction project 2007. 5 ~ 2009. 1 Taean Marine, land, air and soil environment survey Every other year or every year Pyeongtaek Air, soil and water environment survey Half year, quarter and every year Operation area Seoincheon Marine, land, air and soil environment survey Every year Chongsong water pumping Land, aquatic, air, water, noise, vibration, weather environment survey Every year Samrangjin water pumping . N/A

ƜƜƜ Prohibiting the Use of Persistent Organic the items reflected for the protection of environment for the Pollutants specific period when the power plant is under operation and Only the insulating oil used for the transformer is classified then report the results to the relevant agencies. as the persistent organic pollutant out of materials used by our company for the power generation. However, we have Ӥ Environmental impact assessment not introduced or transported the transformer including the insulating oil containing the PCBs since 2002. We have checked if the insulating oil of transformer contains the

Sustainability Report 2008 PCBs and density of insulating oil is appropriate through the 46 total inspection since the agreement to prohibit the use of PCBs signed with the Ministry of Environment in Oct. 2004. We plan to prohibit the use of insulating oil, including PCBs. In addition, we submitted the volu action plans for the prohibition of PCBs specifying the status of transformer containing the insulating oil and nullification plan to the Ministry of Environment in May 2007 and performed the ƣ Air quality survey required actions according to submitted plans. We disposed of 8 transformers out of 20 transformers over 3 years during the period of 2005 thru 2007. We plan to dispose of remaining ones from 2008 to 2011.

ƜƜƜ Environmental Impact Assessment We survey and evaluate the environmental and traffic impact resulted from the construction of power plant before

selecting the project site and preparing the construction ƣ Marine ecosystem survey plans and then reflect the alternative to design after preparing the alternative to minimize the impact to surrounding environment. Also, we collect the opinions from concerned parties such as local residents and relevant agencies and then reflect the collected opinions to power plant construction plans. As a result, all our power plants are constructed and operated in areas far away from the ecosystem protective area where the protective animals or endangered animals live. On the other hand, we verify the results forecasted based on the environmental impact assessment by checking ƣ Measuring the noise ӈ Action procedures applied in case of emergency Ӌ Oil leakage accident ƜƜƜ Preventing the soil pollution Toxic substance leakage accident Ӌ We periodically perform the soil pollution inspection once a Ӌ Earthquake and fire Ӌ Typhoon and surge year or every other year in area where the soil pollution is Heavy snow and flood Ӌ expected by the operation of power plant. No pollution ӈ Action procedures applied to environmental accident is reported. accidents of each facility Ӌ Air pollution preventive facilities Ӌ Water pollution preventive facilities Ӌ Waste storage facilities ƜƜƜ Protecting the ozone layer Ӌ Toxic substance storage facilities Ӌ Oil storage facilities We strictly control the use of substances causing the damage to ozone layer. Also, we strictly manage the stored or used substance. The halon gas, currently used by our company for the operation of electric facilities, is classified Ӥ Simulation drill performed to control the oil leakage as the substance causing the damage to ozone layer. We currently own the halon gas of 10,760kg. The Taean thermal power plant has charged the halon gas of 1,050kg only for the duration of 2002 thru 2006. We plan to nullify or replace the fire fighting facilities using the halon gas on or before 2010.

ƜƜƜ Environmental Accident Preventive and Corrective System We classify all possible environmental pollution accidents by type for completely preventing the environmental accident and operate the consolidated emergency organization. This organization performs the simulation drills more than 12 times a year for training how to take the action and 47

improving the capacity to take the action in a timely manner. Clean Energy As a result, no accident has been reported. Also, we provide the education or training to our employees to prevent the environmental pollution expected when any accident occurs in the transportation equipment. We post the traffic safety poster in the notice board in workplace. We try to prevent the environment relevant accident by performing the system to provide the penalty to our transportation service providers by means of introducing the shutout when any accident resulted from the overspeed occurs. 48 Sustainability Report 2008 Ӥ Ӥ Ӥ 5*!Dbmdvmbufe!cbtfe!po!uif!bduvbm!ifbujoh!wbmvft Important EnvironmentalIndexes nieteeg lcrcPwr7016237,712 6,213 7,091 ElectricPower Indirect energy Direct energy 1st energyconsumptionvolume Power generationstatusforeachyear Environmental ImpactAssessmentProgressingAccomplishments Resource recycling Water qualityarea Pyeongtaek thermal Climate change Pyeongtaek C/C Seoincheon C/C Samrangjin P/S Chongsong P/S Power plants Taean thermal Air area Renewable Areas Total Items Total iuiosca 1,6 1,5 277,951 216,657 217,063 Bituminous coal eoee1935346 345 149 Kerosene ev i 1164,9 51,395 45,296 51,166 Heavy oil N 0487,0 90,938 70,907 60,498 LNG Desulfurization gypsumrecyclingrate(%) Coal ashrecyclingrate(%) Drain waterreuserate(%) Used chemicals(g/kWh) TSP(g-TSP/kWh) NOx(g-NOx/kWh) SOx(g-SOx/kWh) CO 2 37,729 23,900 2005 . 7,141 5,498 (g-CO 509 680 335,967 2005 0 2 eq/kWh) Indexes 38,447 23,850 2006 8,829 4,866 339,418 335 505 2006 62 0 428,342 48,728 11,013 30,750 2007 ( 5,514 2007 Voju;!HXi ( Voju;!HK 309 218 922 2 5* ) ) (Unit: %) Ӥ Ӥ 51/1 51/6 53/1 52/1 52/6 (2020) Goals nieteeg lcrcPwr3423363 293 334 ElectricPower Indirect energy 0.30 0.02 0.24 0.21 Direct energy 100 700 Direct andindirectgreenhousegasemissionvolume Thermal powerplantthermalefficiencytrendforeachyear 90 80 3116 Items Total iuiosca 0052,6 25,634 20,167 20,055 Bituminous coal Accomplishments Kerosene ev i ,0 ,6 3,706 3,267 3,701 Heavy oil LNG 67.3 66.8 0.34 0.02 0.30 0.32 (2007) 100 704 3117 27,150 2005 ,5 ,7 4,575 3,571 3,050 02 23 24 10 Targeting valueincreaseor ( Voju;!Uipvtboe!upo.DP decrease rate 100% 74.8%( 83.5%( 88.2%( 100% 80.8%( 65.6%( 99.4%( 27,321 2006 Ƣ Ƣ Ƣ Ƣ Ƣ Ƣ 22.7) 13.2) 13.3) 25.0) 52.4) 0.57) 3118 34,301 2007 3 fr ) Ӥ Air pollutant emission status for each year Ӥ Water pollutant emission status for each year

Emission volume (ton) Basic unit (g/kWh) Wastewater Basic unit Emission Year Emission volume(kg) SOx NOx TSP SOx NOx TSP Year emission volume(mg/MWh) volume (ton) 2005 11,749 25,352 1,055 0.311 0.672 0.028 COD SS T-N T-P COD SS T-N T-P 2006 10,877 25,673 1,052 0.283 0.668 0.027 2005 354,683 1,892 1,154 50.82 31.00 2006 404,181 1,992 1,430 52.36 37.59 2007 15,431 14,401 976 0.317 0.296 0.020 2007 369,512 1,816 1,472 2,352 14 37.67 30.55 48.80 0.29

Ӥ Coolant use status for each year Ӥ Used amount of power generation water (uipvtboe!upo) Used amount Year Taean Pyeongtaek Seoincheon Items (thousand ton) 2005 3,513 1,336 432 Used amount 3,950 2006 3,949 1,432 460 Water collection 12.6 2005 Temper- 2007 4,696 1,966 519 ature Water drain 20.7 (Ɖ) Difference 8.1 Used amount 3,673 Water collection 13.9 2006 Temper- ature Water drain 22.3 Ӥ Waste generation status for each year (Ɖ) Difference 8.4 Generated Recycling Used amount 5,025 Year amount amount Recycling rate 49 Water collection 14.9 (thousand ton) (thousand ton) Clean Energy 2007 Temper- ature Water drain 23.6 2005 15.1 8.4 55.4 ( ) Ɖ Difference 8.7 2006 48.0 30.8 64.1

ƘCalculated based on the temperature difference measured at inlet and outlet 2007 23.7 6.2 26.1

Happy Energy

We will become your friendly neighbor as your nice partner creating the happy living/

Human & Energy 52 Sustainability Report 2008 number ofemployeesleavingthecompany.Also,we accident period15timesandconsiderablydecreasingthe result, wekeepcreatingnewrecordbyextendingthezero evaluation andprogramtopreparefortheretirement.Asa recruiting andeducation,compensationbasedonthefair focused ondevelopingthecapacitythroughopen families. Wealsooperatetheexcellentpersonnelsystem program inconsiderationofouremployeesandtheir advanced safemanagementsystemandoperatethehealth contribution inour10strategicgoals.Webuildthe focused oncustomersatisfactionandactivationofsocial system, fosteringtheglobalhumanresources,management vision andincludethebuildingaccomplishment-oriented one ofour4strategicprojectsorissuestoaccomplish We decidetheimplementationofoursocialresponsibilityas Happy Energy partner, andcomeclosertothelocalresidentsneighborsinneedortroubleaswell. for thehappyenergyproduction.Inaddition,wemustpursuecoexistencewithourcontractors,business guaranteeing thesatisfactionofouremployeesandtakecaretheirfamilies'healthsafety make ourcustomershappybyproducingtheenergy.Wemustcreateconditionorenvironment We, KoreaWesternPowerCo.,Ltd.,arethecompanyorganizedtogenerateelectricpower.However,wewill partner. and alienatedpeople,toberememberedasthehappiest energy tobesharedwithouremployees,contractors through thelightandheat.Wearetogeneratehappy The electricpowerfillsthepeoplewithwhattheywant billion wonin2007. hours forthevoluntaryserviceandcollectedfundof1.6 alienated peopleeveryyear.Allouremployeesspent20.4 plants andactivelyperformthevoluntaryservicefor billion wontothelocalresidentslivingaroundourpower with ourcontractors.Weprovidethefinancialsupportof7.5 prize fromtheprimeministerforexcellentcooperation prosperity ofourcontractor.Asaresult,weawardedthe business partnerandoperatetheprogramfocusedon consider ourcontractorsasrealpartnerinsteadof Ibqqz!Fofshz 53 lth and Operation of Industrial Safety and Health Safety of Industrial Operation Committee Providing the Safety and Health Education the Safety Providing to Experience the Place and Operating Ɯ Ɯ Ɯ Ɯ Ɯ and compensation We stipulate our liabilities on safety, health hea their for accident, our workers' rights on Ɯ against all We take all preventive and corrective actions according to our construction works and maintenance works education and regulations. We also provide the safety our company and training to all workers employed by We provided the contractor for preventing the accidents. and 110 safety education or training to our 66 employees the safety training employees employed by our contractors in places. center located in our Taean and Gunsan business management Our company shows the excellent safety accident period up accomplishments by extending the zero Samrangjin, Taean to 15 times, 13 times and 7 times in our as of Sep. 2008. and Cheongsong power plant respectively the labor collective conditions agreed with our labor union in agreement signed with labor union according to Industrial Safety and Health Act. The industrial safety and health committee consisting of 9 commissioners representing the labor and management is held in each business place on a quarterly basis according to above collective agreement. If any agendas or conditions are not resolved or solved in Building the Advanced Safety Management Safety Building the Advanced System Our top priority is to take care of safety and health of all our employees serviced in the workplace. We clearly employees serviced in the workplace. take care of safety and health of all our Our top priority is to required for safety and health. We take all actions must be performed based on the recognize that all works the safety and system in principle. We operate in terms of budget, human resource preventing the accidents based on above principle. management system Ɯ Ɯ We acquired the certificate in all our business places by building We acquired the certificate in all our business for the safety management system, K-OHSMS/KOSHA18001, in 2003. the first time in our business section in Korea management We keep trying to settle the advanced safety safety and system under the vision of actualizing the autonomic safety and health health culture. We actualize the autonomic opening the safety culture to be shared by all our employees by in our homepage and health management site, OHSMS-net, and operating the human error preventing system (HEPS) and safety data management system. We awarded the technical innovation management grand prize and prime minister prize in January and November 2007. We keep enhancing our value by guaranteeing the safety of our employees and contractors and settling the safety management culture. Ɯ Our safety management system is applied to our employees Our safety management health committee and contractors. The industrial safety and the overall safety held in each business place for examining in each and health issues. The committee, organized representing the business place, consists 9 commissioners business place labor and management. The chief of the safety and becomes the chairman of committee. Also, in the unit of health council is periodically held or organized part. Safety and Health Health and Safety 54 Sustainability Report 2008 We performtheperiodiccheckup andbloodtestforthe family. periodic medicalcheckupagainstouremployeesandtheir our employeesandfamilybymeansofperformingthe We trytoguaranteethehappylifebytakingcareofhealth Ɯ virtual accidentscenario. the effectivenessofperformeddrillafterpreparing continually performingthesimulationdrillandevaluating We keepfosteringthecapacitytocoverriskby power supplyoccur. disasters suchaspowergenerationaccidentandunstable guaranteeing thequickandeffectivecounteractionwhenany manual andoperatethedisastercounteractioncenterfor system basedonthecrisiscounterplanmanualandaction safety control.Also,wepreparethecrisiscounterplan recovering thedamageresultedfromdisastersand counteraction headquartersforpreventingthedisaster, KEPCO. Weoperatetheconsolidateddisastersafety residents andtoimprovetheservicequalitytogetherwith disasters causingthedamagetoouremployeesandlocal We keeptryingtoprotectthestablepowersupplyfrom Ɯ last year. injuries reported duringtheservicein2007.Onlytwophysical safety. Asaresultoftheseefforts,nodeathaccidentwas industrial safetyinspectorinallourbusinessplacesforthe business focusedonthesafetybyappointinganhonorary health careinsmallbusinessplaces.Weoperateour professional healthcareserviceproviderforouremployees' improvement ofouremployees'health.Wehirethe places suchasTaean,SeoincheonandPyeongtaekforthe Also, weappointahealthsupervisorinourbigbusiness 2007. and musculoskeletalsystemdiseasepreventionplansin working uniformprovidingplans,gypsumprohibitionplans work environmentevaluationplans,healthcare plans, workersafetyandhealtheducationortraining our headofficepreparedtheindustrialaccidentprevention above agendasorconditions.Thecommitteeorganizedin our headofficewillbeheldonaquarterlybasistosolve above committee,safetyandhealthcommitteeorganizedin Ɯ Ɯ Ɯ Ɯ of HealthEmployees' Family Operation ofHealth Program inConsideration System against theDisasters Building theEmergency Counteraction requiring thesickleaveof50dayswerereportedin Ӥ Ӥ converted intotheshiftwork. checkups againstournewemployeesandtobe health andsafety.Also,weperformabovemedical and measuringpartincludingtheshiftemployeesfortheir the powergenerationpart,chemicalmechanical general medicalcheckupagainstouremployeesengagedin annually performthespecialmedicalcheckupincluding of diseaseorinourcompany.Nevertheless,we No employeeisengagedintheworkcausingpossibility agreement withhospital. room, hiringthenurseinourbusinessplaceandmakingan our employeesandtheirfamilybyinstallingthehealthcare agreement. Also,weoperatethecrisiscontrolprogramfor emplyees andtheirfamily)accordingtolabor-management operate theWHP(WorkerHealthcareProgramforour health ofouremployeesandtheirfamilyeveryyear.We 1) Sick leavefrequencyrate:Itmeanstheratecalculatedbydividing supported by criterion accordingtoglobalstandard . report. However,200thousandman-houriscommonlyusedasa Safety Corporation.1millionman-hourisusedasacriterioninthis million man-hour).ThisindexiscontrolledbytheKoreaIndustrial number ofaccidentsbyannualworkhourscompanybasedon1 Employees Accident OccurrenceStatusandSickLeaveFrequencyRate Benefits ProvidedbytheSupportPrograms program Persons Sick leavefrequencyrate Family Number ofaccidents Annual workhours Counseling O O Prevention and risk control 4,012,800 2005 O O 0 0 Treatment 4,192,800 2006 O O 0 0 Education/ 4,353,600 training 2007 O X 0 2 1) Employee Satisfaction

We clearly recognize that the competent employees must be fostered for being adapted to the rapidly changing business environment in a timely manner and guaranteeing the continual growth. We keep developing the core capacity of our employees by building the differentiated fostering system and systematically managing the education and training programs after deciding the long-term competent employee fostering model. On the other hand, we orient the open recruitment to take care of social weak person and solve the jobless young adults raised as the social issues. We provide the equal opportunity to all job applicants by abolishing the educational background limit and age limit. We exclude the gender discrimination based on the gender equality in principle.

Ӥ Increase or decrease of employees hired for above Our labor union consists of union members serviced in 5 power 3 years generation companies separated from the KEPCO. 1,155 union Items 2005 2006 2007 members are assigned to all business places operated by our Number of current 1,673 1,787 1,873 company. 61.6% of all our employees (1,873) are joined as the employees as of end of year union member. Our labor union adopts the union shop, so our New employees 96 142 130 Percentage of new employees are joined as the union member immediately after 5.7% 7.9% 6.9% employee being hired by our company. The clause 26 of labor collective agreement, signed between labor union and company, enforces the company to discuss with labor (Unit: Person) 55

union before changing any important items such as deciding the Ibqqz!Fofshz 3-111 2-898 2-984 budget and regular staff of union members and decreasing of 2-861 2-784 decided budget and regular staff. If the legal position of union 2-611 members is changed because of business closing, division, 2-361 merger, transfer and change of business item, company shall 2-111 inform of that to the labor union 90 days before and faithfully 861 discuss with labor union according to clause 54 of labor collective 611 agreement. Above clause stipulates the foundation required for 361 253 241 :7 the minimum notice period and raising the opinion. 1 3116 3117 3118 ƜƜƜ Number of employees Number of newly recruited employees Solving the Problem of Jobless Young Adults through the Open Recruitment We provide the equal opportunity to all job applicants by abolishing the educational background and age limit and paper-screening system. We wait for the competent applicants by operating the diverse employment programs such as open recruitment, recruitment through the academic-industrial cooperation and honorable treatment and support of distinguished services to the nation. We have recruited 123 employees for last 3 years on the average. We actively join the national and social policies intended to solve the problem of jobless young adults raised as the social issues. 56 Sustainability Report 2008 Ӥ 2007 isconsiderablylowerthanthenationalaverage. years. Theseparationrateof0.43%recordedasend separation ratehasbeencontinuallydecreasedforlast3 for theperformedworks.Asaresultoftheseefforts, satisfaction throughthefairevaluationofandcompensation education ortraining.Weimproveouremployees' capacity inallserviceperiodsthroughthesystematic We provideeachemployeewithchancetodevelopthework Ɯ in theworkplace. nurse, operatingthecooperativehospitalandchildcarecenter increasing the perform theworksordutiesunderstableenvironmentby institutional supporttoenablethefemaleemployee providing theequalchanceuponpromotion.Weprovide promoted 7femaleemployeetomanagerasofend2007by the femaleemployeerecruitmentratiotargetingsystem.We job applicantswhenrecruitingnewemployeesbyoperating principle ofequalitysexes.Weprovidethechancetofemale term femaleresorcesutilizationplanandstrictlyobservethe woman inrecruitmentandpromotionbypreparingthelong- by increasingthisratio.Weabolishthediscriminationof However, weplantoprovidemorechancethehandicapped public corporationwhenrecruitingthehandicappedemployee. requirements forthegovernmentstandardappliedto are workinginourcompany.Thisnumberissatisfiedthe Currently, 37handicappedemployees,2%oftotal No discriminationcasewasreportedin2007. management forallowingtoraisetheopinionatanytimes. management councilandconferencebetweenlabor However, weopenthechannelssuchashotlinetoCEO,labor religion andsocialpositioninouremploymentregulations. condition ofequallytreatingallemployeesregardlesssex, We completelypreventthediscriminationbystipulating Ɯ Ɯ Ɯ Age groups Ɯ Ɯ Number andrateofemployeesretiredindifferentsexes,agegroups andareas Sex Resulted from theHighSatisfaction Actualizing theLow Separation Rate of EqualChance Building theInstitutional Foundation Total employees Items years Less than30yearsold incentive topromotethebirth,appointing Above 50yearsold Female employee 30~50 yearsold Male employee Sub total Sub total Person 22 15 22 19 5 2 3 1,673 2005 Rate 1.32 0.90 0.30 0.12 1.32 0.18 1.14 Person 27 21 27 26 2 4 1 Kyeongnam 88(5%) Kyeongbuk 63(3%) Ӥ Ӥ Ӥ Ӥ Ƙ Jeonbuk 59(3%) 1,787 2006 Items 2005 2006 2007 employees assignedtoSeoul(headoffice) long-term educationandtrainingareincludedintothe New employeesundertrainingandsentfor 2007 Average agesofallouremployeescalculatedas calculated asof2007(personandmillionwon) Basic salariesofmaleandfemaleemployees New femaleemployeesrecruitedforlast3years Percentage ofemployeeslivingineacharea Average basicsalaries 51 yearsold Number ofpersons Chungnam Older than 266(14%) 735(39%) employees Items Rate Total our 1.51 1.18 0.11 0.22 1.51 0.06 1.45 1,673 1,787 1,873 employees Total employees Total employees All new Open recruitment 142 130 96 1,873 1,873 Person (Unit: Person/%.Directorisexcluded) Male 1,738 43 35 43 41 6 2 2 43 employees female 1,873 New 2007 Female 12 20 15 135 43 254(14%) Incheon 292(16%) Seoul 382(20%) Kyeonggi 1,246(67%) 31~50 yearsold 361(19%) years old Less than30 recruitment Rate 2.30 1.87 0.32 0.11 2.30 0.11 2.19 (Unit: Person) Female 12.5% 14.1% 11.5% rate Total 1,873 Ӥ Reason and Rate of Separation2) (Unit: Person/%. Director is excluded)

Items Honorary retirement Death Separation Total separation Total employees Separation rate National average 2007 2 6 8 1,873 0.43 2.18 2006 1 7 8 1,787 0.45 2.26 2005 4 5 9 1,673 0.54 2.37 Total (average) 5 2 18 25 5,333 0.47 2.27 2) National average separation rate is quoted from the labor statistical data prepared by the Ministry of Labor

ƜƜƜ Operation of Career Development Program We seek the way of increasing the technical capacity of our education and training plans suitable for him or her. Also, we employees and guaranteeing the long-term employment. As build and operate the Do Dream e-HRD System, a education a result of above efforts, we develop and operate the career system, as of 1st April, 2008, so that each employee may development program enabling each employee to reinforce improve his or her work capacity using the career development his or her work capacity by preparing and performing the program.

Competent employee Tztufn!efwfmpqfe!boe!eftjhofe!up!fobcmf!ofx!fnqmpzff!up!cf!qspnpufe!up!ejsfdups!bgufs dvmujwbujoh!uif!cbtjd!xpsl!dbqbdjuz!uispvhi!uif!bebqujpo!up!dpnqboz!fowjsponfou!boe fostering road map bdrvjtjujpo!pg!xpsl!dbqbdjuz!boe!uifo!sfjogpsdjoh!uif!qspgfttjpobm!ejggfsfoujbufe!dbqbdjuz/

Annual competent employee fostering road map

Important growth channel Movable channel Channel to prepare the retirement

Retirement preparation service Retirement

Director or 57

executive officer* Ibqqz!Fofshz Service of above 16 years Leader Middle manager Talent

Core competent employee Professional employee Universal competent employee ӋIncrease to chance to ӋOperate the course designed ӋCourse designed to reinforce Course designed complete the national and to acquire the master's the professional capacity. Service of to reinforce the international management degree and doctor's degree ӋCourse designed to reinforce 6~15 years professional course and technological ӋPromote to acquire the the capacity as a junior capacity MBA Course. professional qualification and manager ӋOperate the course designed license ӋEducation or training to reinforce the work ӋCourse designed to learn the designed for the overseas capacity as a leader overseas advanced short-term benchmarking ӋReinforce the capacity technologies Course designed to designed to develop the ӋCourse designed to reinforce Service of acquire the work global business or new the work capacity as a 3~5 years capacity. business middle manager

Course designed to provide new Course designed to develop the work capacity | Provide the self-development program | employee with Circulate the job according to CDP System. chance to adapt to Service of Plan to foster new employee as a professional staff in a timely manner Course to cultivate the common less than 2 company | years environment capacity | Course designed to learn the basic knowledge of job | Site OJT (on-the-job-training) 58 Sustainability Report 2008 participate thisprogram. in thetableonright.Theemployeesofdiversepositions program. Ouremployeeshaveusedthisprogramasshown care education,knowledgeprogramandexperience retirement. ThisprogramconsistsofITEducation,health retirement preparationprogramfor6monthsbeforethe design hisorherlifeaftertheretirementbyproviding corporate image.Wesupporttheretiredemployeeto improvement ofouremployees'satisfactionand the retiredemployee.Thisprogrammakeacontributionto operating theretirementpreparationprogramtosupport proud ofhimselforherselfasaformeremployeeby build thefoundationenablingeachretiredemployeetobe retirement benefitsasofend2007.Furthermore,we 74.4 billionwonhasbeenaccumulatedastheseveranceand retired aftertheserviceofmorethan1year.Theamount increased. Wepaytheretirementbenefittoallemployees critical socialissuebecausetheaveragelifeisgetting The designoflivingaftertheretirementisemergedas Ɯ as statedinthetableonright. The averageannualeducationhoursforeachcategoryare employee are108hoursand3.44times. hours andnumberofeducationsprovidedforeach compared withtheonein2006.Theaverageeducation educated employeeswere7.3%and5.6%increasedas 2007. Theamountofeducationexpenditureandnumber 4.075 billionwonfortheeducationofour6,458employeesin of ouremployees.Wespenttheeducationexpenditure We supportthelearningatalltimesforcontinualgrowth Ɯ improving themanagementefficiency. for thepurposeofaccomplishingbusinessgoalsand employee accordingtomanagementevaluationregulation We annuallyevaluatetheaccomplishmentsofeach Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Program Operating theRetirement Preparation Support for theRetirement Designby the LearningatAllTimes Reinforcing thePersonal Capacitythrough and CompensationSystem Building theAccomplishment Evaluation Ӥ Ӥ Ӥ Ƙ compensation focused Items Total 2005 2006 2007 2008 accomplishment linked Bonus differentiatedby (million won/year) Total educationexpenditures employee Number ofeducationsforeach Total educatedemployees Total employees employee Education hoursofeach Total educationhours employee Education expenditureforeach on accomplishment Annual salarysystem adequate systemwasnotinstalled No educationhoursdataisavailablein2005becausethe the accomplishment employee byemploymentcategory Average annualeducationhoursallocatedtoeach Evaluation andCompensationofAccomplishments accomplishments Retirement preparationprogramoperation resulted fromthe management achievement to personnel Expanded agreement Personal class 1st 12 2 6 3 1 Items class 2nd 2 1 1 promotion. Reflect theresultsofevaluationupon promoted. preparing thelistofemployeestobe Additional pointisprovidedupon 200% accordingtoevaluationresults Bonus isdifferentiatedupto80%~ according toworkaccomplishment employee of1~3classisdecided The annualsalaryofdirectoror class 3rd 14 1 6 3 4 Detailed descriptions class 2005 2,095 3,513 5,963 1,673 3.56 4th 9 1 3 3 2 . . 4th class 221,046 2006 2,155 3,859 6,021 1,787 Below 3.36 123 4 1 3 203,113 2007 2,171 4,075 6,458 1,873 3.44 108 Total 41 15 13 6 7 Management Focused on Coexistence with Our Contractors

All companies have to keep the fair and clear relation with our contractors. We build the foundation of fair trade through the systems and procedures and carefully listen to our customers' opinions because it is our responsibility. Also, we, as a public corporation, have the responsibility to find the small and medium companies with excellent technologies and grow together with these companies.

Ӥ Results of integrity survey performed for last We decide the goals of improving the reliability of power 5 years generation facilities by developing the excellent electric 211/1 appliances and growing together with our contractors by generating the high quality power. We perform the :1/1 coexistence and cooperation project by preparing the road map and upgrading the contractor support strategy and 91/1 system. We enable our contractors to cultivate the ability to stand on their own by promoting to develop the technology 81/1 and improving the productivity through those efforts. We 59

also try to improve the competitiveness of our contractor by Ibqqz!Fofshz 71/1 providing the support to find a new market. As a result, we awarded the prize from the prime minister 61/1 Total points Sensed integrity-level Potential integrity-lev for the strong support for the small and medium companies in Dec. 2006. Moreover, we will get together with our contractors as a business partner.

2008 2004 2005 2006 2007 (First half) ƜƜƜ Improving the Fairness and Transparency Total points 89.9 90.4 96.5 96.9 97.0 We consider the fairness and transparency as our top Sensed 93.8 93.5 98.7 98.7 98.5 priority in relation with procurement procedures. We build integrity-level the complaint handling systems such as customer's Potential 86.5 85.7 93.1 94.1 94.8 integrity-level complaint notice center and raised objection treatment Ƙ The sensed integrate-level and potential integrity-level are procedures so that our customers may raise the complaint evaluated whether the corruption is experienced and with ease. We ask our employees to sign the integrity recognized and administrative system and ethic principles are observed respectively. No corruption has been pledge upon bidding. We frequently check the satisfaction of reported for last 2 years. However, this index is evaluated our employees and contractors through the clean to be relatively low. We plan to complement the cooperator monitoring and clean employee monitoring and institutional support and education because it is not easy to raise the complaint and contact the handling staff then reflect the checked results to the works. 60 Sustainability Report 2008 ƣ Ӥ making apaymentincash. Also, wemitigatethefinancingcostofourcontractorby required fordeliveringtheappliancestoourcontractor. solve thefinancialdifficultybymakingadvancepayment through thenetworkloansystem.Wehelpourcontractorto We lendtheoperatingcapitaltoourcontractoratlowrate Ɯ providing theR&Dsupport. appliances importedfromforeigncountriesbymeansof quality powergenerationappliancesandlocalizingthe and reducethepowergenerationcostbydevelopinghigh We trytoimproveourcontractors'technicalcompetitiveness Ɯ our contractorsthroughaboveefforts. productivity andgeneratingthesynergyeffecttogetherwith quality powerbyimprovingourcontractors'technologyand and system.Webuildthepartnershiptogeneratehigh coexistence byreorganizingthecontractorsupportstrategy contractors andperformthecooperativeprojectfor We preparetheroadmapforgrowthtogetherwithour Ɯ Ɯ Ɯ Ɯ Make apaymentintimely contractors Final evaluationofcooperativeresearch projectwithour Ɯ Ɯ Ɯ Financial supportsystemforourcontractors Contractor Effort toSolve theFinancial DifficultyofOur Competitiveness through theR&DSupport Improving OurContractor's Technical Building thePartnership withOurContractor Advance payment Network-loan With-loan manner Items of payment Within 1or2daysafterbeingasked collateral andguaranty Provide thecreditloanwithout Within 50%ofcontractamount production Provide thecapitalrequiredfor Descriptions ofsupport Effective date 2005.12 2004.11 2006.8 2005.4 ƣ the world High capacitysmartbatterydeveloped forthefirsttimein Ӥ Ӥ cooperation coexistence Reinforce Projects Provide theR&DFund(0.1billionwon) Items Our contractorsupportroadmap R&D Projectforourcontractor and the 520(220 contractors) 120(13 contractors) Record for2006 29(7 contractors) 8(2 contractors) Develop newproductunderthe Ӌ Ӌ Ӌ Before 2004 building the foundation) and fostering protection Support for relation cooperative Build the support political Provide the (Period of R&D forcooperationwith condition ofpurchase Items contractor Ӌ Ӌ Ӌ companies medium by smalland products produced procurement of Increase the Fund Provide theR&D cooperative system work link Build theschool- (Settlement 2005~2006 period) 700(300 contractors) 40(30 contractors) Record for2007 28(8 contractors) 3(2 contractors) 2005 8.5 20 1 (Unit: 0.1billionwon) Ӌ Ӌ Ӌ support customized Provide the contractor innovative Foster the competitiveness global Foster the After 2007 2006 11.6 (Maturity 16 period) 2 2007 13.5 24 3 Ibqqz!Fofshz 61 1.4 4.0 10.7 rate(D/B) Purchasing (Unit: 0.1 billion won/%) (Unit: 0.1 billion technology 23 43 82 amount(D) Purchased Product certified in terms of new Product certified 1.4 10.8 20.2 rate(C/B) Purchasing Preferentially Treat the Company Seeking Treat Preferentially Management the Sustainable of Local Making a Contribution to Activation Policy based on Local Purchase Economy Support for expanding the market of product expanding Support for small and medium companies by produced marketing of products global Support for companies by small and medium produced 23 119 119 technical development Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ amount(C) Purchased Ɯ for examining the After preparing the detailed standard the excellent articles in 2004, we preferentially treat such as company companies in terms of quality control certified by ISO, company owning the industrial property right, company certified in environment, excellent company in the labor-management cooperation and company operated by female CEO or handicapped. We preferentially treated 2 excellent companies in terms of human right and hiring the handicapped in 2007. Ɯ We authorize the qualification to participate the bidding to only the local companies located around our power plants through the limited competitive bid to take care of local small and medium companies and activate the local economy if the construction amount is less than 5 billion won, or when the manufacturing amount, purchasing amount, service fees are less than 0.21 billion won. Ɯ purchase record exceeding the legal We accomplish the goal of products produced by small and mandatory purchase certified in terms of new technology. medium companies and produced by small Also, we activate the purchase of products the appliances and medium companies by directly purchasing any products are from small and medium companies if designated by the Small Business Administration. Ɯ produced by We contribute to expand the export of products the products small and medium companies by displaying in overseas produced by small and medium companies finding group and exhibition, sending the overseas market as the vender organizing the counseling conference to record via an invitation of buyers. Product produced through the Product produced 67.8 80.0 86.0 rate(B/A) Purchasing of 23 33 100 Number supported companies medium companies 772 1,711 1,106 5 4 3 amount(B) Purchased 196 million dollar Record for 2007 Product produced by small and Product produced times Counselling amount of Performed . of 26 11 Number 898 2,521 1,382 supported companies amount(A) Total purchased 6 3 . 176 million dollar Record for 2006 times Counselling amount of Performed 2005 2006 2007 Items Items Our global marketing support of product produced by small and medium companies for each year Record of purchasing the products produced by small and medium companies produced by small and the products Record of purchasing Consultation conference held to export products produced by small and medium companies Conference held to publicize the products produced by Conference held to publicize the products produced small and medium companies consulting conference to record the vender via an invitation of buyer Important record Support for display in the overseas exhibition Send the overseas market finding group Ӥ ƣ ƣ Ӥ 62 Sustainability Report 2008 and environment. generating theenergyinharmonywithhuman,technology based onourmotto,makeacontributiontosocietyby (culture art,academiceducationandpromotionofsports) disaster relief),nature(preservationofnature)andculture focused on3areassuchashuman(socialwelfareand We systematicallyprogressthesocialcontributionactivities Ɯ mind. neighbor bygettingtogetherwithlovely actualize thehappyenergyandfriendly This emblemmeansthatallouremployees Ɯ through thepartnershipwithlocalwelfaregroups. also activatethesocialservicerequiredbylocalsociety through thelocalcompetentpersonfosteringproject.We local culture.Wetrytofosterthecompetentperson since 2005.Also,weprogresstheprojecttopromote effort toenablealllocalresidentsenjoythehappyliving slogan, “happyenergyandfriendlyneighbor”,asapartof service groupconsistingof8centersand76teamsunderthe We havesupportedthelowincomegroupthroughoursocial Together withLocalSociety Ɯ Ɯ Ɯ Ɯ culture tomakeacontributiongrowthoflocaleconomyasparteffortsminimizethenegativeeffect. effect tolocalsocietybecauseofitscharacteristics,soweperform3coreprojectsfocusedonhuman,natureand our socialresponsibilitytotakecareofnationalandsocieties.Also,thepowerplantcausesnegative We, asapubliccorporationtosupplytheelectricpower(publicgoods),havebeengrownbyfaithfullyperforming Important accomplishments Emblem Ӥ Year 2004 2008 2007 2006 2005 History ofsocialcontributionactivities Month 10 08 06 04 08 05 04 10 10 07 06 12 02 Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ from leukemiaandchildrentumor Performed theblooddonationtohelppatientssuffering and slogan Organized oursocialservicegroupanddeclaredtheemblem cooperation withlocalsociety. Awarded thesocialcontributiongrandprizeinareaof suffering fromtheintractabledisease. Collected thefundrequiredforsupportingpatients voluntary serviceinGaeseng,NorthKorea. Supported thecoalsharingmovementandperformed in thePhilippines. Supported thefoodreliefservicesandangelhospitallocated National RedCross. Signed thesocialcontributionagreementwithKorean area ofsocialresponsibility. Awarded themanagementinnovationbestpracticeprizein Performed theprojectofbuildinglovelyhouses. farming villageserviceactivitieslinkedwith46villages. Signed theagreementwithlocalsocietyandperformed Financially supported10lovelyhousesrepairproject. Signed thenationalparkpartnership. Awarded thecleanmanagementgrandprize. ơ ơ plant. Slogan: Happyenergyandfriendlyneighbor Supported 1,004poorhouseholdslivingaroundthepower Descriptions Ӥ Local society support project cost spent for building ƜƜƜ Building the Infrastructure Required for the Local the infrastructure required for the local development Development through the Communication with Local Society (Unit: billion won) We clearly recognize that the construction of power plant

200 2:/66 causes the diverse effects to area where the power plant is 175 constructed. In this regard, we try to guarantee the fair 150 compensation to the local residents to be moved to other areas

125 25/98 because of power plant construction by asking the professional

100 :/93 survey agency to check the expected damage and rights to loss 2/68 8/84 75 1/2 by signing the agreement with local residents to move out. In

50 addition, we provide the diverse benefits such as support for 9/36 8/74 tuition fee and preferential treatment upon recruiting to the 25 5/79

0 local residents and their children after moving out. Currently, 2005 2006 2007 we authorize the additional point of 10% to the residents living Basic support project cost Special support project cost around our power plant when applying for the employment. An

Ƙ Basic project cost is decided by the power generation applicant recruited through this preferential treatment system amount of each power plant, so it is changing each year. is promoted to manager. Special support project cost is decided by the construction cost of power plant constructed in the specific area, so it is We do our best efforts not to cause the damage to local society considerably changed in each year. by sufficiently compensating the land and rights occupied by the construction and operation of power plant according to Ӥ Amount shared by each business place for 2007 (Unit: Million won) applicable laws. Furthermore, we secure the communication Local government Power plant Total channels such as work meeting with local government and Taean 3,423 1,499 4,922 signing the pledge upon construction to be ready for unexpected Pyeongtaek 724 217 941 public petition. Seoincheon 438 216 654 No power plant and facilities were constructed on land in 2007, Gunsan 0 26 26 so no project caused the damage to local residents and living Samrangjin 282 120 402 Cheongsong 539 148 687 environments. Project intended to support for the development of local area is under progressing to build the infrastructure in Total 5,406 2,226 7,632 63

area around our power plant. Total amount spent for building Ibqqz!Fofshz the infrastructure required for the development of local area is Ӥ Support for patient suffering from leukemia stated in the table on the left. 4.8 billion won was spent for 2005 2006 2007 building the local infrastructure out of 7.63 billion won allocated Number of blood donation 214 239 . for the year of 2007. We provided the financial support of 2.22 certificates Money(thousand won) 10,000 10,000 20,000 billion won for the purchase of agricultural machinery or Number of supported equipment and installation of storage warehouse. We keep 2 3 3 children trying to expand the infrastructure of local area by providing the Ƙ 188 blood donation certificates out of certificates collected financial support of 1.3 billion won for the maintenance and in 2007 are provided to the children patients suffering from leukemia. The remaining ones are planned to be donated repair of 36 roads. The amount of 7.63 billion won was allocated together with blood donation certificates to be collected in to each business place in 2007 as stated in the table on the left. 2008.

ƜƜƜ Residential and Medical Support for Low Income Group Every year, 100 of our employees have joined the lovely house building project performed through the cooperation with Korea Habitat started to solve the residental problem of homeless people since 2004. We also provide the construction cost. We prepare the promotion fund to repair 10 old houses, and our employees provide the service as the volunteer. This program started in 2007 and will be annually performed. 64 Sustainability Report 2008 special productsafterbuildingthe publicitycenter. protect thelocalculturalheritageanddisplay get togetherwithlocalresidentsbysecuringthespaceto our Cheongsongpowerplantfaithfullykeepsthepromiseto service forthelocaltraditionalculturalevents.Inaddition, company. Weprovidethefinancialsupportandvoluntary The Mecenatactivitiesareactivelysupportedbyour Ɯ as apartoftop-orientedprogram. students) andspecialtyprogram(360over3years experience program(360students),Englishcamp(112 support forsendingthestudentstooverseasculture Especially, ourTaeanpowerplanthasprovidedthefinancial school appliancesandorganizingthesketchcompetition. support of1.08billionforthepurchaseorreplacement study intheexcellentenvironmentbyprovidingfinancial We buildthefoundationrequiredforenablingstudentsto 818 studentslivingaroundourpowerplantsin2007. addition, weprovidedthescholarshipof0.35billionwonto to keepaccumulatingthefundasscholarshipfund.In (3.83 billionwonisaccumulatedasofend2007)Weplan the scholarshipfundoutofallocatededucationalprojectcost Each powerplantaccumulatethecertainamountoffundas building theinfrastructureinlocalsociety. fostering thecompetentpersonismorevaluablethan local society.Theefforttodevelopthesocietyby Nothing ismoreimportantthaneducationforthegrowthof Ɯ annually held. highly evaluatedinlocalsociety,soitisplannedtobe 2006 asapartofeventtomakewarmworld.Thisis partnership agreementwassignedwithKoreaRedCrossin plant withvolunteersofRedCrosssincesocialcontribution society byvisiting1,004poorhouseholdslivingaroundpower We havecreatedournewimagetogettogetherwithlocal sponsored byourcompany. festival forchildrenpatientssufferingfromleukemia,is children patientssufferingfromleukemia.Thedayofangel, suffering fromleukemia.Wepaythedoctor'sbillfor2or3 tumor associationundertheintentionoftreatingpatients send theblooddonationcertificatestoleukemiaandchildren patient sufferingfromleukemia,since2004.Wecollectand service underthetitle,blooddonationforlifeandloveto All ouremployeeshaveparticipatedthelovelyblooddonation Ɯ Ɯ Ɯ Ɯ and Protection Activities Participating theLocalCulture Development Project Local SocietyandActivating theScholarship Improving theEducational Environment of Ӥ Ӥ ƣ Business places power plant Scholarship supporteventforthe areaaroundour Local cultureactivitiessupportedbyeachpowerplant via aVisit Supporting andEncouragingthePoorHouseholds Cheongsong Pyeongtaek Seoincheon Samrangjin Gunsan Taean 57 millionwon 3116 1,000 Households Traditional funeralfestival upre mutNumberofhouseholds Supported amount National marathon Strawberry festival Representative Pyeongtaek lake Singing contest Apple festival competition programs festival 60 millionwon 3117 9.15 millionwon 1.94 millionwon 1,004 Households 8.1 millionwon 4.6 millionwon 7.5 millionwon supported 5 millionwon Amount in 2007 ƜƜƜ Ecosystem Protection Activities Suitable for the Local Environments Clean environment is the most valuable asset to hand over to our descendant. We progress the ecosystem protection movements such as river cleaning movement and long-term environment cleaning movement for protecting the ecosystem around our power plants. We have actively protected the marine ecosystem by catching and collecting the fingerfishes of 22 ton damaging the marine ecosystem since 2004. Each of our business place periodically cleans the surrounding environment through the voluntary service. Our Cheongsong power plant progresses the ecosystem protection project after signing the partnership with National Park Management Corporation. We also provide the knowledge required for protecting the ecosystem by organizing the environment school in consideration of children's important role to protect the future environment. In addition, we progress the ecosystem protection activities through the events such as making the nest and feeding the wild animal during the winter.

ƜƜƜ Diverse Voluntary Service for the Local Society We progress the diverse social contribution activities for the children such as providing the school appliances to Gongju Technical High School through the brotherhood relationship. We come closer to the local society as a friendly neighbor by progressing the support and voluntary service for the persons alienated from the society through the activities such as support for the young family heads and single senior. We keep trying to protect the national park ƣ Diverse environment cleaning events by signing the partnership agreement with National Park 65

Management Corporation. In addition, we try to improve the Ibqqz!Fofshz environment of local society and get together with local society by performing the farming village voluntary service and purchasing the Support for the recovery of oil leakage accident Ӥ special products. We keep supporting 56 villages including the Manpower Items Places Equipment Facilities Eoeunri after signing the brotherhood relation. We perform the (accumulated) diverse activities such as field trip to power plant, support for village Provide the 2 loaders Guraepo accommodation, event and purchase of agricultural products. Besides, we effectively A dump Records Hakampo 3,074 persons kitchen and truck progress the farming village support programs during the busy Hwengchonri washing water 4 buses to military troop farming season through the voluntary service. Ƙ Special donations of 26.39 million won and 22.23 million won are provided by the Taean-county and Seosan-city to ƜƜƜ Support for the Recovery of Damage Resulted recover the oil leakage accident. from the Oil Leakage Accident Oil leakage accident occurred in Hebei Spirit operating in the sea around the Taean in Dec. 2007. All our employees started the voluntary service for preventing the spread of oil in area where the leakage accident occurred with the intention of protecting the surrounding sea where our important power plant is located nearby. Our 3,000 employees joined the work to prevent the spread of oil until May 2008. We made the cash donation of 50 million won for the local residents through the local government. We directly and indirectly supported the prevention activities by providing the equipment such as loader, dump truck and motor sprinkler and accommodation and transportation to the military troop engaged in the prevention activities. 66 Sustainability Report 2008 Ӥ Ӥ Times ofaccumulated Items Accumulated service human culture Love of Love of Love of nature Number ofpersons from Leukemia Support forChildrenPatientSuffering Helping avillage 2005. signing theagreementwith46farmingvillagesinJune the childrenpatientssufferingfromleukemiasince2005. the financialsupportandblooddonationcertificatesto Scale ofVoluntaryService(Manpowerandhours) Descriptions ofimportantActivities involved inthe activities activities Mecenat activities Angel festival Lovely marathonsupport Educational project Support forculture Support fortechnicalhighschool the winter Event offeedingthewildanimalduring Event ofmakingthenest Environmental class Ecosystem preservationproject River ormountainvoluntaryservice Cultural experienceofyoungfamilyhead Making warmworld Building theLovelyhouse Farming villagehelpingprogram Lovely blooddonation from intractabledisease Support forchildrenpatientsuffering Ski campwithhandicapped Items hours Titles ofactivities Year 2006 2007 2006 2007 2006 2007 farming seasonby during thebusy voluntary service farming village performed the place has Each business We haveprovided for thedayofangel. through thesupport treatment withhope take themedical children patientsto We havehelpedthe Organize thecultureeventandprovidesupportinlocalarea children. Provide thechancetoexperienceculturealienated Provide thesupportforsportsactivities Provide thescholarshipandschoolappliances Provide thesupportforlocalculturefestivals Provide thesupporttoGongjuHighSchool Environmental classforchildren Management Corp. Sign thepartnershipagreementwithNationalPak Environment cleaningactivities Provide youngfamilyheadwithachancetoexperiencetheculture. plant throughtheRedCross. Provide thesupporttopoorneighborslivingaroundourpower Join thevoluntaryserviceandprovidesupport. Provide thesupportduringbusyfarmingseason. children patientssufferingfromLeukemia. Provide theblooddonationcertificateandtohelp association. Provide thesupportthroughleukemiaandchildrentumor Employees andtheirchildrengettogetherwiththehandicapped welfare Descriptions Social 15,355 14,307 2.749 3,265 668 538 Loverly human Korea RedCrossin2006. around ourpowerplantaftersigningtheagreementwith tumor associationsince2007. by signingtheagreementwithleukemiaandchildren Making theWarmWorld from IntractableDisease Support forChildrenPatientSuffering Disaster relief 1,515 238 199 67 4 7 Loverly nature Environment preservation Ӥ Ӥ Lovely Cheongeum Foundation Handicapped Korea IntractableDiseaseAssociation Professional seniorcarecenter Seoul blindpersonwelfarecenter Handicapped WelfareCenter Daniel WelfareCenter Korea Habitat association Social welfarejointcollection association Leukemia andchildrentumor Korea RedCross Hours spentbyeachpersonforthe intractable disease suffering from the childrenpatient the medicalcostto program toprovide performed this We havecontinually 2,738 6,873 1,155 1,895 households living 1,004 poor essential goodsto providing the residents by come closertolocal We keeptryingto Voluntary ServiceRecords Cooperation throughthepartnershipwithWelfareAgencies Amount ofprovidedfund village 55 83 voluntary service Elements Agencies Lovely Culture &Art house 353 114 109 86 42 47 visiting theorphanage. to thesocietyandcleaningfacilitiesbyperiodically located in2007. through theinvitationinareawhereourlocalsubsidiaryis providing themedicaltreatmentcosttochildrenpatients Patients Support forthePhilippineChildren Lovely VillageVoluntaryService Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Ӌ Loverly culture plant throughcooperation. Provide thesupportto1,004poorhouseholdslivingaroundourpower financial support. Cooperate withblooddonationandprovidethevoluntaryservice diseases. Provide thesupportforchildrenpatientsufferingfromintractable adapt tosociety. Provide thevoluntaryservicetohandicapped,helphandicapped Provide thesupportwithFKIandjoinhandicappedprogram. Plan todevelopnewcooperativeprogram. Ski schoolgettingtogetherwiththehandicapped. Provide thevoluntaryserviceandsupporttohandicapped. Provide thevoluntaryserviceandfinancialsupportforhandicapped. Provide thevoluntaryservicefor1stclasshandicapped. Bind thebooksforblindperson. Wash thedirtyclothesaftercollectingfromhandicappedhousehold Provide thesupporttohomeless Help thechildrenpatientsufferingfromleukemia 2.17 billionwon 16.9 hour/year education Academic 2006 154 137 12 44 19 1 Cooperated areas Promotion of 1.58 billionwon 20.4 hour/year 2007 sports activities inKoreaby social contribution country aswell activities inforeign social contribution We performedthe 28 19 13 handicapped adapt helping the handicapped, such asbathingthe voluntary services the diverse We haveperformed 8 0 0 Goals for2008 2.5 billionwon 18 hour/year Total 18,846 22,810 4,761 4,941 832 707 Appendix

ӋVerification Statements Prepared by the 3rd Party ӋGRI Index Chart ӋDefinition of Words ӋMajor Awards and Certificates ӋReader's Questionnaire ӋReport Preparation and Epilogue 68 Sustainability Report 2008 verification tocheckthesustainable managementactivities report preparedbyKWP.Wehaveplannedthesite through theguidelineofGRI,newsmediaandinternetwith considered bytheKWPcomparingdatasurveyed We haveevaluatedifthesustainabilityisappropriately Review ofDocuments procedures. preparing thisverificationstatementthroughthefollowing information, reporteddata,processandsystemusedfor incorrect information.Wecheckedthereliabilityofreported confirm whetherthisreportcontainsanycriticalerroror This verificationwasappropriatelyplannedsothatKWPmay Korea WesternPowerforthesustainablemanagement. accomplishments ofheadofficeand6businessplaces The verificationwasconductedagainsttheeffortand Verification Scope andProcedures Pilot, 20070whenpreparingthisstatement. Initiative) andElectricUtilitySectorSupplement(Version Reporting Guidelines(GS,2006)ofGRI(Global Also, wehaveappliedotherstandardssuchasSustainability completeness andadaptability. sustainability reportbasedontheprincipleofimportance, Company in2003.Thisstandardstipulatestoverifythe based onAA1000StandardpublishedbyAccountability We, KFQ,havepreparedandperformedtheverification Verification Standards Power's stakeholders. we donothaveanydeflectedopiniononKoreaWestern service providingthe3rdpartyverificationstatements.Also, Western Powerforthepurposeofmakingprofitotherthan We, KFQ,arenotengagedinanybusinessoperatedbyKorea Independence ofVerification liability toprovideourverificationstatementsonthisreport. report andpreparationstandards.We,KFQ,shallbear Western PowerCo.,Ltd.,shallbearallliabilitiesonthis 2008 SustainabilityReport.However,theCEOofKorea the "KFQ),arerequestedtoverifyKoreaWesternPower's We, KoreanFoundationforQuality(hereinafterreferredtoas Introduction Verification StatementsPreparedbythe3rdParty 2007 financialstatements. information accordstostatedintheaudited and reliabilityofdata.Wehaveverifiedifthefinancial these informationandreportpreparingprocess. inspected andanalyzedthesystemdesignedtomanage consideration ofimportanceinformationandthen handling staffbasedonthesamplingprinciplein documents preparedbyKWPandinterviewwithinformation management activitiesandaccomplishmentsthroughthe We havecollectedthewrittenevidencesaboutsustainable procedures areeffective. information managementsystemandreportpreparing to checkiftheinformationstatedinreportiscorrectand office, TaeanbusinessplaceandSeoincheon We haveperformedthesiteverificationagainstSeoulhead Site Verification 2006 SustainabilityReportingGuidelines (G3). This reportisevaluatedasA+inthelevelofapplying Level ofApplication is foundinthisreport. verification procedures,Noseriouslydistortedinformation following conclusionregardingthisreportthroughabove We havesecuredthereasonablebasistopresent Conclusion and completeness. so thisreportissomewhatlimitedintermsofcorrectness data andmethodofcalculatingpresumingthenumbers, stated inthisreportaredependentonthecharacteristicsof The correctnessandcompletenessofaccomplishmentdata Considerations andLimitations Guideline again. GAP AnalysisagainstthefinalreportaccordingtoGRI reflected inthefinalreport.Also,wehaveperformed appropriately correctedandtheninformationare incorrect informationanddistortedare We haveverifiedthatsomeerrorsfoundinabovesteps, Checking Examination Importance Our Suggestion for the Improvements Our client, KWP, operates the importance evaluating process ӋOur client is recommended to classify the information, used for evaluating his or her activities, accomplishments, acquired through the communication with his or her effect and interests of his or her stakeholder in order to stakeholder, and evaluate the importance of analysis include the sustainable accomplishment information, system and checked his or her stakeholder's requirements required for his or her stakeholder's decision making, in this and then reflect the information and evaluated results to report. Our client, KWP, preferentially reports the his or her management activities. Also, our client is accomplishment of checked issues. recommended to systematically operate overall systems used for reporting the accomplishments. Completeness ӋOur client is recommended to manage overall Our client, KWP, completely checks and understands the accomplishment indexes in the level of environment, importance of sustainable accomplishment related to its health and safety relevant accomplishment data by activities, products and services. However, our client is effectively operating the system on data collection range recommended to comprehensively and deeply analyze the and skill. efforts and accomplishment of your contractors and organization.

Adaptability Our client, KWP, appropriately opens his or her stakeholder's interests, his or her policies and organization's efforts and accomplishments to apply the October 20, 2008 applicable standards in this report. In the future, our client 69

is expected to appropriately select the indexes so that his or Appendix her organization's accomplishments may be easily Korean Foundation for Quality understood in terms of time series. Kim, Jae Ryong, CEO 70 Sustainability Report 2008 4. governance 3. Report 2. Organization and 1. Strategy GRI IndexChart structure parameter profile analysis Names andNo.ofIndexes initiative external Liability on Verification GRI alert Report and Report profile Report profile participation Stakeholder's .3Policyandcurrentpracticewithregardtoseekingexternalassuranceforreport 3.13 Tableshowingthelocationofstandarddisclosuresinreport 3.12 Significantscope,boundary,ormeasurementchangesfrompreviousreportingperiod 3.11 3.10 Awardsreceivedduringthereportingperiod 2.10 .7Keytopicsandconcernsthathave beenraisedthroughstakeholderengagement 4.17 Approachestostakeholder engagement 4.16 Standardtoidentifyandappoint thestakeholder 4.15 Listofparticipatedstakeholders 4.14 Membershipsinassociation 4.13 Externallydevelopedeconomic, environmentalandsocialcharters 4.12 Howtheprecautionaryapproach orprincipleisaddressed 4.11 Processtoevaluatetheaccomplishments acquiredbytheboardofdirectors. 4.10 . Board-levelprocessforidentifyingand managingrisksandopportunities 4.9 Internallydevelopedstatementsofmissionorvalues, codesofconductandprinciples 4.8 Processtodeterminethequalificationsandexpertiseofboardmembers 4.7 Processtopreventtheconflictinboardofdirectors 4.6 4.5 Mechanismtoprovidetherecommendationordirectionboardofdirectors. 4.4 Independenceofboarddirectors 4.3 Whetherthechairmanofboardholdspositiondirectorconcurrently 4.2 Governancestructureoforganization 4.1 3.9 Standardtoreportthelegalentitiessuchasjointventure,subsidiary,leasedfacilitiesandcontractors 3.8 Limitationinscopeandboundaryofreport 3.7 Boundaryofreport 3.6 Processtodefinethecontentsofreport 3.5 Agencytoaskaboutreportandreportedcontents 3.4 Reportingcycle(annualandbiennial) 3.3 Datewhenthelatestreportispublished 3.2 Reportingperiod(Fiscalyearandcalendar 3.1 significantchangesinscaleandstructureorownershipduringthereportingperiod 2.9 Scaleoforganization 2.8 Targetingmarkets 2.7 Characteristicsandlegalpositionofownership 2.6 Numberofcountrieswheretheorganizationisoperated 2.5 Locationofheadoffice 2.4 Operationalstructureoforganization 2.3 Representativebrand,productandservice 2.2 Nameoforganization 2.1 Descriptionsofimportanteffect,riskfactorandchance 1.2 StatementdisclosedbyCEO 1.1 re-statement Explanation oneffectofanyre-statementsinformationprovidedinpreviousreportandreasonsfor arrangement andorganization'sperformance Linkage betweencompensationformembersofhighestgovernancebody,seniormanager,executive underlying estimationappliedtocompilationofindicatorandotherinformation Data measurementtechniquesandbasesofcalculation,includingassumptiontechnique Descriptions ofindexes Report level Ɯ;! Disclosed ɂ;! Partially disclosed ƛ;! Page 70~73 15~16 13~14 16~17 11~12 16~17 18~19 7, 15 5, 76 o icoe / Notapplicable N/A: Not disclosed 6~7 6~7 6~7 76 17 17 15 12 12 11 16 16 11 76 17 16 16 . . . 6 5 6 3 2 7 2 2 2 2 2 2 ;! Included inthecoreindexes Report level N/A N/A N/A Ɯ Ɯ Ɯ Ɯ Ɯ ɂ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ ɂ Ɯ Ɯ Ɯ ɂ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ ɂ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ 1~10 1~10 1~10 1~10 7 1~10 1~10 1~10 1~10 1~10 1~10 1~10 1~10 1~10 1~10 UNGC Appendix 71 UNGC 7 1 6 8 8 8, 9 8 8 8 8 8 8 8 8 8 7~9 8 8 8 8 8, 9 8, 9 8 8 8 8 7, 8 Ɯ Ɯ Ɯ Ɯ Ɯ ɂ ɂ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ ɂ ɂ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ ɂ Ɯ Ɯ Ɯ ɂ ɂ Ɯ Ɯ Ɯ N/A Report level .ƛ . 61 63 37 63 24 58 33 41 33 38 38 38 39 38 43 43 43 46 46 38 43 43 37 45 45 46 46 46 38 39 47 36 44 43 42 Page Descriptions of indexes Percentage and total volume of water recycled and reused Location and size of land owned, managed in, or adjacent to, protected areas and areas of high biodiversity Location and size of land owned, managed in, or adjacent to, protected value outside protected area species with habitats I areas affected by Number of IUCN Red list species and national conservation list operations, by level of extinction risk EC1 economic value Generation and distribution of direct EC2 risks and opportunities due to climatic change Financial implications and other EC3 Coverage range of pension EC4 the government Financial assistance received from EC5 level wage and legal minimum wage Difference between standard entry EC6 of spending on locally based suppliers Policy, practises, and proportion EC7 for local hiring and proportion of senior management hired from the local community Procedures EC8 and impact of infrastructure investments and services provided primarily for public benefit Development EC9 and describing significant indirect economic impacts Understanding 63~65 EN1 Materials used by weight or volume EN2 input materials Percentage of materials used that are recycled EN3 source Direct energy consumption by primary energy EN4 Indirect energy consumption by primary source EN5 improvements Energy saved due to conservation and efficiency EN6 products and services Initiatives to provide energy efficient of renewable EN7 and reduction achieved Initiatives to reduce indirect energy consumption EN8 Total water withdrawal by source EN9 of water Water source significantly affected by withdrawal EN22volume by type and disposal method Waste EN23 number and volume of significant spills Total EN24 of transported, imported, or treated waste deemed hazardous Weight EN25bodies and related habitats significantly affected by discharges of water and runoff Water EN26 to mitigate environmental impacts of products and services, and extent of impact mitigation Initiatives EN27 sold and their packaging materials that are reclaimed by category Products EN28 36 non-compliance with environment laws and regulations Fines for EN11 EN12 on biodiversity Description of significant impact of activities, products, and services EN13 Habitats protected or restored EN14 Strategies for managing impacts on biodiversity EN15 EN16 direct and indirect greenhouse gas emissions by weight Total EN17 relevant indirect greenhouse gas emissions by weight Other EN18 to reduce the greenhouse gas emissions and reductions achieved Initiatives EN19 of ozone-depleting substances by weight Emission EN20 XOx and other significant air emissions by type and weight NOx, EN21 discharge by quality and destination Total water EN10 Indirect economic effects Economic accomplishments indexes Management method notice Economic accomplishm ents Market position Product and service Observing the laws Raw materials Energy Water Biological diversity Air discharge, wastewater and wastes Environmental accomplishments indexes Management method notice Names and No. of Indexes method and accomplishme nt indexes (economy) 5. Management 72 Sustainability Report 2008 5. Management (environment) nt indexes accomplishme method and Names andNo.ofIndexes management Local resident Management methodnotice Human rightaccomplishmentsindexes equal chance Diversity and Management methodnotice Labor conditionsandaccomplishmentindexes practice Security Enforced labor Child labor bargaining collective Freedom of discrimination No practice procurement Investment and training Education and safety Health and relation management Labor- Employment Whole Management methodnotice Social accomplishmentsindex Transportation Environmental accomplishmentsindexes laws Observing the Action competition Disturbed Public policy Corruption Local society N0Totalenvironmentalprotectionexpendituresandinvestmentsbytype EN30 Environmentalimpactoftransportingproduct,materialsandmembers EN29 A4Ratioofbasicsalarymentowomenbycategory LA14 Compositionofgovernancebodiesandbreakdownemployeespercategory LA13 Percentageofemployeesreceivingregularperformanceandcareerdevelopmentreview LA12 Programforskillsmanagementandlifelonglearning LA11 Averagehoursoftrainingperyearandemployeebycategory LA10 R Totalnumberofincidentsviolationsinvolvingrightslocal peopleandactionstaken HR9 HR8 Measurestocontributetheeliminationofforcedlabor HR7 Measurestakentocontributetheeliminationofchildlabor HR6 HR5 Totalnumberofincidentsdiscriminationandactiontaken HR4 Totalhoursofemployeetrainingonpoliciesandproceduresconcerning aspectsofhumanrights 61 HR3 Suppliersandcontractorsthathaveundergonescreeningonhuman rightsandactontaken HR2 Investmentagreementthatincludehumanrightsclausesorhaveundergonescreening HR1 O Valueofsignificantfinesandtotalnumbernon-monetarysanctions fornon-compliance SO8 Legalactionsforanti-competitivebehavior,anti-trust,andmonopoly practicesandtheiroutcomes SO7 Totalvalueofcontributionstopoliticalparties SO6 Publicpolicyposition SO5 Actionstakeninresponsetoincidentsofcorruption SO4 Percentageofemployeestrainedinorganization'santi-corruption policiesandprocedures SO3 Businessunitsanalyzedforrisksrelatedtocorruption SO2 SO1 A rga oass okoc ebr,terfml,o omnt ebrrgrigsrosdsae 54 Healthandsafetytopicscoveredinformalagreementwithlaborunion LA9 Programtoassistworkforcemembers,theirfamily,orcommunitymemberregardingseriousdisease LA8 Rateofinjury,occupationaldisease,lostdays,absence,andnumberfatalitiesbyregion LA7 Totalworkforcerepresentedinformaljointmanagement-workerhealthandsafetycommittee LA6 Minimumnoticeperiodsregardingoperationalchanges LA5 Percentageofemployeescoveredbycollectivebargainingagreement LA4 Benefitsprovidedtofull-timeemployeesversustemporaryorpart-time LA3 Totalnumberandrateofemployeesturnoverbyagegroup,sexregion LA2 Totalworkforcesbyemploymenttype,contractandregion LA1 operations ofcommunities Nature, scope,andeffectivenessofanyprogramspracticesthatassessmanagetheimpacts rights Security personneltrainedintheorganization'spoliciesorproceduresconcerningaspectsofhuman be atsignificantrisk,andactionstakentosupporttheserights. Operations identifiedinwhichtherighttoexercisefreedomofassociationandcollectivebargainingmay Descriptions ofindexes Page 55, 62 55-57 20-21 20-21 56-57 62-63 47 43 56 56 58 21 52 55 56 58 54 56 61 58 54 55 55 63 21 20 46 54 21 .ƛ . . .ƛ 9 Report level / 1,2,4 5 N/A N/A Ɯ ɂ ɂ Ɯ Ɯ ɂ ɂ ɂ Ɯ Ɯ ɂ Ɯ Ɯ ɂ ɂ Ɯ Ɯ Ɯ Ɯ Ɯ ɂ Ɯ ɂ Ɯ Ɯ Ɯ ɂ ɂ Ɯ ɂ Ɯ Ɯ 8,9 8 1~3 1, 2,6 1~6 1~6 6 1 1 3 1, 3 6 1, 3,6 10 10 7 7, 10 UNGC Appendix 73 UNGC 7 7 8 8 1 8 9 1 Ɯ ɂ Ɯ Ɯ Ɯ ɂ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ Ɯ ɂ Ɯ ɂ ɂ ɂ Ɯ Ɯ Ɯ Ɯ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Report level 9 ...... 28 63 54 12 30 25 26 26 53 21 36 47 21 21 21 21 21 26 21 21 56-57 Page The companies and civic groups, joined the UNGC (UN Global Compact) as a member, do their best efforts to actualize 10 principles related to the human right, labor, environment and anti-corruption. Ƙ Descriptions of indexes Life cycle stages in which health and safety impacts of products and services are assessed for improvements and safety impacts of products and services are assessed for Life cycle stages in which health and services category subject to such procedures and percentage of significant products health and with regulations and voluntary codes concerning Total number of incidents of non-compliance services during their life cycle by type of outcome safety impacts of products and products and required by procedures, and percentage of significant Type of product and service information services subject to such information products and with regulations and voluntary codes concerning Total number of incidents of non-compliance service information and labeling voluntary codes concerning marketing Total number of incidents of non-compliance with regulations and communication Practice to cover the linguistic disorder, cultural difference and handicap for the easy access to power and safe use of power Number of persons moved by the construction or expansion of power plant, power transmission line and distribution line PR8 Total number of substantiated complaints regarding breaches of customer privacy PR9 Total number of incidents of violations involving rights of local people and actions taken PR1 PR2 PR3 PR4 PR5 satisfaction Practice related to customer PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communication PR7 EU1 capacity of each energy source Facilities EU2 of home, industrial and commercial customers Number EU3 Length of transmission and distribution lines EU4 Amount authorized to emit CO2 for each nation and controlled area EU5 to guarantee the long-term and short-term power availability and reliability Plan EU6 Demand control program including the program targeting the home, commercial and industrial uses. EU7 R&D targeting the supply of reliable power and sustainable power generation EU8 Regulation to stop the operation of nuclear power plant EU9 capacity against the forecasted power demand Planned EU23 EU24 Number of lawsuits resulted from the assets owned by company EU25 Percentage of person not receiving the power service in service area EU26 Number of unpaid households EU27 Power failure frequency EU28 Power failure period EU29 Average plant use rate EU11 program Expected power amount saved through the demand control EU12 Average power generation efficiency EU13 Power transmission and distribution efficiency EU14 shown in the area to move Biological diversity shown in existing area against the one EU15 and development Process to guarantee the retention of competent employees EU16 Total number of employees hired by contractors EU17 Percentage of contractors trained about health and safety EU18 Decision making process joined by stakeholder and accomplishment through this process EU19 Approach method to control the environment resulted from the enforced moving EU20 Disaster control plan, training program and recovery plans EU21 EU22 Partnership program prepared by government to improve and keep the access to power service EU10 Expected capacity saved through the demand control program Product liability accomplishments indexes Product liability accomplishments Management method notice Product and service labeling Marketing communicatio n Protection of customer's personal information Customer's health and safety Observance of laws Product (social) Social (social) Organization profile Economic efficiency Environment Labor (social) Names and No. of Indexes indexes of power utilities method and accomplishme nt indexes (Social) 6. Additional 5. Management 74 Sustainability Report 2008 making theGWP.Also,eachemployeemustenjoyhisorherjobs. guaranteed. Eachemployeemustbeproudofhisorherjobsfor integrity, principleandstandard.Thefairproceduresmustbe work placeismadeonlywheneachemployeehasthehumanity, their worksandenjoyworkingwithcoworkers.Thegreat their supervisorsanddirectorsorexecutiveofficers,areproudof The GWPmeansthebestworkplacewhereallemployeestrust GWP (GreatWorkPlace) decrease accomplishmentsaccordingtoKyotoProtocol. and thenreflectthedecreasedgreenhousegasemissiontoits developing countryforthedecreaseofgreenhousegasemission country tomakethefinancialandtechnicalinvestmentin The CDMmeansthesystemdesignedtoenabledeveloped CDM (CleanDevelopmentMechanism) visiting customer. contract handlingstaffofcontractor,projectmanagerand The CCMmeansthephonesurveyconductedagainst CCM (CleanCooperatorMonitoring) CAP, managementinnovationtechniqueofGE. strategies ofcompany,isdesignedthroughthebenchmarking creating thevisionandpromotingchangeaccordingto effective innovationofcompany,generatingthechangeneeds, to fostertheemployeesaschangeleaderguaranteeing The CAP,achangeaccelerationprogramdevelopedbytheKWP CAP (ChangeAccelerationProgram) control thestrategyandevaluateaccomplishments. and controlitsmissionstrategy,isnewsystemdesignedto into thecomprehensiveoneenablingcompanytomeasure The BSC,aframeusedforchangingtheexistingmeasuringindex BSC (BalancedScoreCard) adjusted tobepositionedinthemiddleofspecification. asked bythecustomerandaverageofproductcharacteristicsis when thediffusionofproductisdecreasedwithinspecification per 1millionopportunities.Thisqualitylevelmaybeacquiredonly the probabilityofgeneratingerrorormissisbelow3.4times produced orprovidedbythecompanyisalmostperfectbecause 6 sigmameansthatthequalitylevelofproductorservice 6 Sigma Definition ofWords focused ontheprocessandactioninsteadofresults. of customer.TheCEMisaconceptcustomersatisfaction circumstance experiencedbycustomersandmentalconditions understands itscustomersbyanalyzingandconsolidatingall The CEMmeansthatthecompanycomprehensively CEM (CustomerExperienceManagement) evaluation. personnel changes,managementbyobjectivesandpre- employee fosteringprogramdevelopedbyintroducingthe addition, theCDPmeanscomprehensivecompetent focused onthetrainingprogramssuchasOJToroffJT.In competent employeehasperformedthemanpowerpolicy The companyrealizingtheimportanceoffostering The CDPmeansthecareerdevelopmentplansandworkplans. CDP (CareerDevelopmentProgram) different countries.Its3working-levelgroupsreviewthe warming. Thisorganizationconsistsofexpertsfrommany of reviewingthecomprehensivecounterplanagainstglobal The IPCCistheorganizationestablishedin1988forpurpose IPCC (IntergovernmentalPanelonClimateChange) Program), presentstheguidelinesofsustainabilityreports. The GRI,organizationannexedtotheUNEP(UNEnvironmental GRI (GlobalReportingInitiative) turbine respectivelythroughthepurificationprocess. and 2ndpowergenerationprocessingasturbinesteam pressure andthencompletethe1stpowergenerationprocess combustion andgasificationreactionathightemperature of carbonmonoxideandhydrogenthroughtheincomplete such ascoal,heavyoilandpetroleumcokeintothegasconsisting system designedtoconvertthelow-levelsolidandliquidsamples The IGCCmeanstheintegratedgasificationpowergeneration IGCC (IntegratedGasificationCombinedCycle) terms ofprofit,socialliabilityandenvironment. operation, andcompanymustbecomprehensivelyevaluatedin on impacttosocietyandenvironmentresultedbyitsbusiness The CSRmeansthatthecompanyshallhaveResponsibility CSR (CorporateSocialResponsibilities) scientific evaluation of global warming, impact of global warming be ready for the Product Liability Act, means new management to environment or society and counterplan against the global system model of quality management activities designed to warming. However, the final goal of this organization is to sign improve the safety of product during the total product life cycles the Global Warming Prevention Treaty. such as development, design, manufacturing, shipping and disposal of product. IR (Investor Relation) The IR means that the company publicizes its image and ROIC (Return on Invested Capital) accomplishments against its stock and bond investors for The ROIC means the profit index showing the profit acquired acquiring the fair evaluation in the capital market. While the PR through the capital invested for the production and business (Public Relation) is performed to publicize the overall company's operation. The ROIC of power generation company is evaluated activities against the common people, IR is performed to provide or calculated based on (after tax operating profit + depreciation) the information on company's management activities to the / average ROIC. The company tries to improve the ROIC by investors for securing the superior position in the capital market. increasing the sales, decreasing the cost and effectively operating the invested capital. K-OHSMS (Occupational Health & Safety Management System) SCR (Selective Catalytic Reduction) The K-OHSMS means the management system designed to The SCR means the system designed to discharge the NOx after manage the organization by effectively distributing the physical separating the NOx contained in the exhaust gas into N2 and O2 and human resources of company after deciding the goals, by passing the NOx through the catalytic layer. intended to keep and improve the safety and health of employees, and stipulating the organization, responsibilities and TPH (Total Petroleum Hydrocarbon) procedures required for accomplishing the decided goals. The TPH means total petroleum hydrocarbon used for checking if any sample is contaminated by the kerosene, diesel oil and jet P-CRM (Policy Customer Relationship Management) oil and bunker C Oil. The P-CRM, system designed to provide the policy information differentiated and customized for each customer, means the UN Global Compact publicity media positively adopted by the government agencies The UN Global Compact means the international agreement 75

for the purpose of forming the consensus with the people and proposed by Kofi Annan, the former UN Secretary-General, in Appendix improving the reliability and effectiveness of works. 2000 for the purpose of combining the corporate social responsibility (CSR) with business. Currently, 4,000 organizations, PCBs (Polychlorinated Biphenyis) organized in 116 countries, including 3,000 companies join this The PCBs, general name of substance remaining when the agreement. This agreement recommends each organization or hydric atom of biphenyl (C12H10) is substituted with chlorine, company to voluntarily reflect 10 principles in 4 areas such as means the residual organic pollutant causing the damage to human right, labor, environment and anti-corruption to its skin for a long because of its strong toxicity and slow dissolution management activities. speed. Electric Precipitator PMP (Project Management Professional) The electric precipitator means the system designed to collect The PMP means the project management professional or the dust by turning the dust particle contained in the gas to have project management professional engineer. Because the the electric characteristics. interest in and demand for project management are rapidly increased, interest in PM is increased accordingly. The Wet Limestone Desulfurization Facility qualification certification system was started by the PMI (Project This facility is used for removing the sulfur oxides by letting Management Institute) in 1984. the SOx, contained in the gas, react to limestone by means of passing the exhaust gas through the limestone aqueous PSMS (Product Safety Management System) solution and producing the gypsum used as the construction The PSMS, management activities performed by the company to material. Major Awards & Certificates Month/ Organized and supported Year Names of awards and certificates Awarding intention day by 5.20 2008 social contribution grand prize .!Support activities for the local society is acknowledged Kyunghyang Ilbo .!Accomplishment of achieving the government innovation level checkup and 3 innovative activities is acknowledged New quality forum, Korea Economic 5.15 2008 quality innovation grand prize (Accomplishments of 6 sigma/quality work group and proposal system are Daily and KFQ '08 acknowledged) 1.31 Excellent business place for securing the safe space .!Fire fighting facilities furnished in the business place are acknowledged as safe. Fire fighting prevention agency and KSC 2008 technological innovation grand prize in the area of Korea Economic Daily and Open 1.16 .!Nominated as the company progressing the technological innovation effectively public corporation Management Institute Ministry of Industry & Energy, KCCI 12.21 Sustainable management grand prize .!Excellence of sustainable management accomplishment is acknowledged and IPI FKI, Ministry of Culture & Tour, 12.15 Corporate communication grand prize .!Management activities and accomplishment are opened to investors and visitors Chosun Ilbo New technology commercialization prize awarded by Ministry of Industry & Energy and 12.13 .!Nominated as the company finding the new markets government ATS

12.04 Certified as the excellent company for the voluntary agreement .!Nominated as the excellent energy saving company and eco-friendly company. EMC and Ministry of Industry & Energy

.!Settle the voluntary safety and health management system and prevent the industrial Fire fighting prevention agency, 11.27 Korea safety grand prize '07 accident. Kyunghyang Ilbo 11.21 23rd energy grand prize .!Nominated as the advanced company in the area of efficiency and energy. Kyunghyang Ilbo, KEPCO 11.20 Korea idea management grand prize .!Settle the participating culture by activating the proposal KPAA .!Settle the productivity improvement system through the diverse improvement and 10.15 Korea productivity grand prize Korea Management Association innovation activities. .!Nominated as the top power company based on the comprehensive accomplishment 6.21 Nominated as top power company KEPCO evaluation .!Nominated as the company effectively progressing the technological innovation and 1.17 Korea technological innovation grand prize Korea Economic Daily maximizing the effects .!Nominated as the top company for the close cooperation between big and small 12.28 Prime minster award, corporation award FKI, KFSB companies Sustainability Report 2008 76 12.20 Acknowledgment of achieving 10-fold figure of no disaster .!Nominated as the excellent company accomplishing the goals of no accident. Korea Industrial Safety Corporation Certified as the excellent business place for the voluntary .!Nominated as the excellent company actively performing the climatic change 12.13 Energy Management Corp. agreement agreement by saving the energy and decreasing the exhaust gas. .!Nominated as an excellent company for contribution to making a eco-friendly business 12.9 Environment minister award Ministry of Environment place and growth of local society.

'06 11.8 Prime minster award, 22nd Kyunghyang-electricity award .!Nominated as the company showing the best energy saving record. Kyunghyang Ilbo and KEPCO

6.29 Environment award .!Nominated as a company making a contribution to environment Chosun Ilbo .!Nominated as an excellent company making a contribution to growth of small 6.7 Prime minister award, 1st beautiful companion award Small Business Administration companies

5.19 Korea standards system management award .!Nominated as an excellent company in terms of quality, environment, safety and health. Korea Standard Association

2.8 2nd prize, clear management award .!Nominated as a clean company. Top 5 economic associations 1.11 2005 Korea construction award (industrial facility sector) .!Nominated as an eco-friendly company. Korea Construction Ilbo Associations and Organizations Joined by Our Company as a Membership Member Names of Names of organizations Activities organizations Activities Korea Electric Academic Exchange the technology, participate the education and KMAC Participate the benchmarking training and exchange the information. Association training. Collect the research paper. Introduce the advanced technology on power generation KEF Train the labor-management relation provide the legal advisory service. EPRI facilities Exchange the technical information and participate the Korea CFO Association Participate the seminar and discuss the works. Korea Electric Association seminar. Benchmarking of proposal activities and exchange the information and participate Korea Compressor Exchange the technology, participate the education and KSSA the seminar. Engineering Association training. Collect the research paper. Korea Plant Industry KSA Participate the regular meeting and seminar. Collect the new project information. Association Korea Construction Provide the work support related to construction KMAC Exchange the information and participate the seminar. Consulting Engineers superintendence and exchange the technical information Association EEI Acquire the research data Korea Red Cross Perform the activities linked to social contribution. FKI (Federation of Korean Korea Industrial Safety Check the economic trend and exchange the information. Exchange the safety, health and technical information. Industries) Corp. KMA Korea Management Korea Fire Safety Perform the fire safety education. Participate the Utilize the economic education. Association Association environmental education. The Korea Society for New and Collect the information on new renewable energy technology trend and utilize the Environment Preservation Collect the environment preservation data. Participate the Renewable Energy collected information when introducing the renewable energy facilities. Association environmental education. The Korean Society of Exchange the technology, participate the education and training. Collect the Exchange the project technology and information. Participate Korea PM Association Mechanical Engineers research paper. the education. Participate the CESPI Conference and CEO conference and exchange the Perform the energy welfare project. Perform the activities to AESIEAP Korea Energy Foundation information between members induce the 2013 WEC General meeting. Voice of Customer

Associations and Organizations Joined by Our company as a Membership Member Reader's Questionnaire Please share your ideas on "WP 2008 Sustainability Report" To create a more faithful and accurate report, we want to listen to your valuable opinions about this report. Your answers will be reflected when preparing reports to be published in the future.

1. How did you know this report? ӭ Website ӭ Media ӭ WP ӭ Seminar and lecture ӭ Others

2. Select one of the following items as your job or organization ӭ Director and employee ӭ Investor/Shareholder ӭ Customer ӭ Industry ӭ Contractors and supplier ӭ Local resident/NGO ӭ CSR Specialist ӭ Press ӭ Academia ӭ Government ӭ Others ;

3. How do you like this report? ӭ Easy to understand ӭ Approximately understood ӭ Approximately not understood ӭ Difficult to understand

4. Which part of this report is appealed to you? ӭ Corporate information ӭ Social accomplishments ӭ Environmental accomplishments ӭ Economic accomplishments

5. Which part of this report needs to be supplemented? ӭ Corporate information ӭ Social accomplishments ӭ Environmental accomplishments ӭ Economic accomplishments ӭ Others ;

6. Which part of this report needs to be improved for upgrading the quality of this report ?

7. Please feel free to write down your frank opinion if you have anything to suggest about our sustainable management.

Name ;!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Sex ;!ӭ Male ӭ Female

Address ;!!

F.nbjm!beesftt!;!!!!! Ufm!;!!

Pddvqbujpo!;!! IQ!;!! ᢿ᫧ᕻ

Thank you for your response. Mailing address : Strategy & planning team, Korea Western Power Co., Ltd. 411 Yeongdongdaero(Samseong-dong), Gangnam-gu, Seoul 135-791, Korea Tel : 02-3456-7613 Fax : 02-3456-7752

Contents Report Preparation and Epilogue Application of GRI G3 We, Korea Western Power Co., Ltd., apply the G3 guideline of GRI when preparing the 2008 Sustainability Report. We declare CEO Message 04 We deeply realize the importance of sustainable department. The 2nd TF Team increase the completeness of that this report meets the requirements Communication with Stakeholders 06 management. We do our best efforts to actualize the clear report by comprehensively classifying and arranging the data. for above G3 Guideline. Evaluation of Importance 07 management by considering our stakeholder as the top We start the preparation of this report under the goal of The KFQ, Korea Foundation for Quality, verifies that this report acquires the A priority. We organize the TF Team by making use of handling making the best report. However, we feel some insufficiency Degree during the verification process. staffs serviced in our head office for guaranteeing the resulted from limited manpower and time. If you find any Challenge & Make a Difference +Note : The sign, +, means that this report is verified by the 3rd party. substantiality and reliability. errors or defect in our report, please remind us errors or Our History 10 1. Purpose of Publication The 1st TF Team consisting of 22 staffs arrange the activities defects through the reader's questionnaire. we will Vision and Management Strategies 13 The purpose of this report is to open our overall activities, performed by our and accomplishments based on the data provided by each supplement our report based on your comments or opinions. company for completing our social liability, and accomplishments acquired Characteristics of Power Industry 15 through the activities to our stakeholders such as shareholders, government agencies, investors, contractors, local society and civic groups. Governance Structure 16 Decision President & CEO T/F Team Members 2. Report Preparation Standards Risk Management 18 Report verification Verified by the This report has been prepared by applying the Sustainability Reporting Items T/F Guideline 2006 of GRI (G3) and Electricity Utility Sector Supplement (draft) For Ethic Management 20 Adjustment Executive Vice President professional company Su Keun Yang, MD, Management the details, refer to the GRI Index Chart. Project Manager Improvement Dept. Chun Su Kim, Social contribution team 3. Scope and Duration of Report Project manager T/F Team leader Creative Energy leader, Management Improvement Dept. This report has been prepared to explain the business operation of our Seoul Management improvement Analyze the stakeholder and supervise Sun Bin Im, Deputy General Manager, head office and 7 business places. The duration to report is January 1st, 2007 Creative Energy 24 division director the overall report preparing process. Social Contribution Team thru December 31st, 2007. Some accomplishments acquired in July 2008 are Energy Security 25 Carefully prepare and review the included in this report. Our accomplishments acquired over last 3 years 2005 Jeong Lae Im, Manager, Publicity Team challenge & make a difference section. thru 2007 are specified in this report to show the trend of our TF Team Leader Value Creation 27 Carefully prepare and review the accomplishments. Jeong Su Lee, Manager, Financial Team Social contribution team T/F Team creative energy section. Technological Development 30 lader members Carefully prepare and review the clean Jae Chul Lee, Manager, Environmental & 4. Characteristics of Report and Difference from Previous Ones Advisory energy section. Chemical Team Working-level job We publish our Sustainability Report based on the environment report Management Innovation 31 Advised by the TF Team Members(1st, Carefully prepare and review the happy Rae Hyun Jeong, Manager, Construction professional company published in 2004. We published our first Sustainability Report by adding the Important Management Accomplishments 32 2nd) energy section. Team economic and social accomplishments to our existing environment report for Arrange the accomplishments of 21 staffs including Sang Hak Lee, Planning 9 departments the purpose of guaranteeing the smooth communication with our stakeholder. important issues. Dept. We specify the insufficient parts of 2007 Sustainability Report such as DMA (disclosure on management approach), activities related to our stakeholder Clean Energy and importance evaluation more detail. Also, we specify the accomplishment information at end of each section so that the readers may comprehensively Clean Energy 36 check our management accomplishments. Climatic Change and Energy 37 5. Data Measuring and Selecting Standards Utilizing the Resources and 41 Sustainable Management Progressing Trace The financial accomplishments stated in this report are prepared according to Minimizing the Generation of Pollutant financial accounting standards. Our environmental and social accomplishments are prepared according to Important Environmental Indexes 48 2005 Environment Report 2006 Environment Report 2006 Sustainability Report 2007 Community Relations White Book (2005.5) (2006.11) (2007.9) (2007.10) applicable laws or data measuring and selecting standards.

6. Policy and Practice of Verification Agency Happy Energy This report has been verified by the KFQ, the 3rd party verification agency, for guaranteeing the reliability. Happy Energy 52

7. If you have any questions on this report, contact us at following Safety and Health 53 phone numbers and address: Employee Satisfaction 55

Homepage: www.westernpower.co.kr Management Focused on 59 Coexistence with Our Contractors Handling department Together with Local Society 62 Strategy & planning team, Management strategies department Korea Western Power Co., Ltd. Appendix How to contact us Tel : 02-3456-7613 Verification Statements Prepared by 68 Ӌ Our first environment report Ӌ Our second environment report Ӌ Our first sustainability report Ӌ Our first community relations report Fax : 02-3456-7752 the 3rd Party Ӌ We have arranged the environmental Ӌ Build the environment management Ӌ Prepare this report focused on strategies, Ӌ Arrange the social contribution management activities and system and arrange the environmental systems and accomplishments. strategy, organization, system. E-mail : [email protected] GRI Index Chart 70 accomplishments since 2002. accomplishments. Ӌ Nominated as the top company by the Ӌ Arrange the social contribution Ӌ Revise and declare the environment policy Ӌ Ecosystem preservation and stakeholder Hankyoreh Economic Institute. Definition of Words 74 accomplishments acquired after being Challenge & make a difference and environment management plans. partnership -Nominated as the top 4 clean company in separated from KEPCO. Ӌ Decide the long-term environmental goals Ӌ Nominated as the top ESH Value East Asia. This is a management policy slogan showing our strong intention targeting Ӌ Arrange our strategic social contribution Major Awards and Certificates 76 of each area management company. Ӌ Nominated as the top sustainable the sustainable management by making a difference based on the challenging program. Ӌ Strategy to be ready for the climatic change management company. and creative thought. Nominated as the 2008 top social Associations and Organizations Joined by 76 protocol and sustainable management. Ӌ Nominated as the top company for the Ӌ Our company as a Membership Member excellent communication. contribution company. 3119

2008 Sustainability Report vujbjjzSfqpsu Tvtubjobcjmjuz World Best 3E Creator Energy̸Environment̸Expertise

www.westernpower.co.kr 411 Yeongdongdaero, Gangnam-gu, Seoul 135-791, Korea Tel. 02-3456-7711 Fax. 02-3456-7759