The study proposes some to improve the efficiency of the electric power industry by maximizing the utility of competition and strengthening regulatory effectiveness on monopolies
In order to break KEPCO’s monopoly over the electric power industry and to transform it into a more efficient industrial organization, the electric power industry restructuring plan was established. The plan aims to:
1) Divide existing power plant sites to be managed by a number of companies, instead of KEPCO
2) Introduce competition among utility companies, but maintain vertical integration of power transmission and distribution, operated through the KEPCO monopoly
3) Separate distribution from transmission in the next several years
4) Adopt price regulations in power transmission and distribution for the time being
5) Establish a regulatory body to oversee pricing
Determining market structure between vertical and horizontal integration and establishing a regulatory body is not sufficient for successful restructuring of the electric power industry, and reform in ownership and governance structure is critical. The power generation sector, which has a competitive market structure, and monopolized power transmission, should be privatized as soon as possible. Along with privatization of power companies, the government’s role and involvement should be reduced to that of an indirect regulator, and the proposed regulatory body should be separated from management.
After restructuring is complete, a system should be developed for operation of the electric power industry and electricity price determination, so that the government can be directly involved in resource distribution through transparent price regulations, established considering political and policy objectives in order to reduce costs. Moreover, the upgraded institution should allow appropriate profit margins for cost reduction, and as an integral part of the overall restructuring effort, relevant government agencies’ functions and organizations should be adjusted as well.
The electric power industry should have a well-established, sophisticated market structure in which more electricity is generated at lower costs without threatening safety of system operation. Electricity should be delivered to end-users through efficient pricing, reflective of opportunity costs. Price regulation is inevitable in monopolistic transmission, but the transmission system should be re-designed so that transmission costs provide the appropriate compensation for capital investment, and the transmission company can save costs through investment and transmission service provision.
전력산업 구조개편 이후 규제체계에 관한 연구(Study on the regulatory system after restructuring of the electric power industry)
|Series Title; No||연구보고서 / 2000-04|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Energy|
|Holding||KDI; KDI School|