By Choi Sung-jin
So spoke industry experts with a unanimous voice at a workshop to discuss advancing the nation's electricity market, organized by the Korea Economic Research Institute (KERI) Thursday.
"There is no competition in Korea's power market because of its time-honored monopolized electricity supply system, which also restricts the creation of diverse services linked to power sales," KERI President Kwon Tae-shin said. "The nation needs to open it up to the private sector, promoting competition."
Academics agreed. "The power rate system has been operated unreasonably over the past three decades or so with little incentives for the government and state utility to lower electricity charges," said Professor Kim Young-san of Hanyang University. "The fundamental reason is the Korea Electric Power Corp. (KEPCO) is monopolizing the sale of electric power, leaving no choices to consumers."
Noting that Japan reformed its system by introducing competitive retailing in April to induce a reduction in power charges, Professor Kim stressed Korea should follow the example of its neighbor.
Yoon Won-cheol, another Hanyang University professor, agreed, saying: "Most of the OECD member countries have changed their electricity markets to a structure in which many sellers of electric power can compete. These suppliers are offering diverse rate systems for consumers' convenience."
Professor Yoon said the key point in the discussion to reform the progressive power rate system should be finding structural solutions to restore consumers' rights of choice. "Most of all, KEPCO should make public its production cost," he said. "Korea should not stop at touching up its power rate system but overhaul its electricity market."
Others accused the government of distorting the power market. "As the government has set up high entry barriers to the power market and controlled electricity prices through a state monopoly, Korea's power generation and transaction processes have become very rigid and its power market is also unstable," said Professor Sohn Yang-hoon of Incheon University.
In the short run, most stressed the need for lowering electricity charges, particularly through revising the progressive rate system.
"Wholesale electricity prices have sharply dropped over the past three years but its retail prices remained little changed," said Kim Dae-wook, a professor at Soongsil University. "This means there is ample room to reduce power rates for household, industrial and educational consumers. What's needed is a voltage-based power rate system that honestly reflects production costs."
Noting it is problematic that KEPCO is collecting power charges four to seven times the production cost, which remains at less than 100 won per kilowatt-hour, Kim said: "It should simplify sections of the progressive rate system and sharply reduce the graduated rates."
Business community participants called for a change in industrial power charges.
Pointing out that the cost-recovery rate of industrial electricity charges rose to 109 percent, far higher than the 95 percent in the residential power rate, Nam Jeong-im, an official at the Korea Iron and Steel Association, said: "The unduly high cost-recovery rate of the electricity charge in the industrial sector needs to be adjusted to be in balance with other sectors."
So spoke industry experts with a unanimous voice at a workshop to discuss advancing the nation's electricity market, organized by the Korea Economic Research Institute (KERI) Thursday.
"There is no competition in Korea's power market because of its time-honored monopolized electricity supply system, which also restricts the creation of diverse services linked to power sales," KERI President Kwon Tae-shin said. "The nation needs to open it up to the private sector, promoting competition."
Academics agreed. "The power rate system has been operated unreasonably over the past three decades or so with little incentives for the government and state utility to lower electricity charges," said Professor Kim Young-san of Hanyang University. "The fundamental reason is the Korea Electric Power Corp. (KEPCO) is monopolizing the sale of electric power, leaving no choices to consumers."
Noting that Japan reformed its system by introducing competitive retailing in April to induce a reduction in power charges, Professor Kim stressed Korea should follow the example of its neighbor.
Yoon Won-cheol, another Hanyang University professor, agreed, saying: "Most of the OECD member countries have changed their electricity markets to a structure in which many sellers of electric power can compete. These suppliers are offering diverse rate systems for consumers' convenience."
Professor Yoon said the key point in the discussion to reform the progressive power rate system should be finding structural solutions to restore consumers' rights of choice. "Most of all, KEPCO should make public its production cost," he said. "Korea should not stop at touching up its power rate system but overhaul its electricity market."
Others accused the government of distorting the power market. "As the government has set up high entry barriers to the power market and controlled electricity prices through a state monopoly, Korea's power generation and transaction processes have become very rigid and its power market is also unstable," said Professor Sohn Yang-hoon of Incheon University.
In the short run, most stressed the need for lowering electricity charges, particularly through revising the progressive rate system.
"Wholesale electricity prices have sharply dropped over the past three years but its retail prices remained little changed," said Kim Dae-wook, a professor at Soongsil University. "This means there is ample room to reduce power rates for household, industrial and educational consumers. What's needed is a voltage-based power rate system that honestly reflects production costs."
Noting it is problematic that KEPCO is collecting power charges four to seven times the production cost, which remains at less than 100 won per kilowatt-hour, Kim said: "It should simplify sections of the progressive rate system and sharply reduce the graduated rates."
Business community participants called for a change in industrial power charges.
Pointing out that the cost-recovery rate of industrial electricity charges rose to 109 percent, far higher than the 95 percent in the residential power rate, Nam Jeong-im, an official at the Korea Iron and Steel Association, said: "The unduly high cost-recovery rate of the electricity charge in the industrial sector needs to be adjusted to be in balance with other sectors."
![[ANALYSIS] Tesla, BYD's price cuts unnerve LGES, Samsung, SK](https://img.koreatimes.co.kr/upload/thumbnailV2/b1cf8ba68d474cb69352bfe7ea9d14f0.jpg/dims/resize/178/optimize)
![[INTERVIEW] How ATEEZ achieved worldwide success](https://img.koreatimes.co.kr/upload/thumbnailV2/c7723b56dde94eb4b260950d368fe8fb.jpg/dims/resize/178/optimize)
