Electricity Sector Reform in South Korea had been adopted in 2003 as a part of their economic reform. Two legislative attempts had been made by the South Korean government to liberalize the electric and power sectors in that country. Moreover, the Korea Electricity Commission and the Korea Power Exchange started some new policies of reform.
Reasons Behind Reform:
The South Korean economy had been growing rapidly after the war and it was dependent on the coordinated state-corporate actions. Therefore, restructuring the electricity sector was very essential for the government to modernizing the country’s economy.
The South Korea’s nuclear power industry was growing and new technologies took a huge part in the development of the country’s economy.
South Korea was heading towards rapid industrialization, so consumption of electricity had been increasing.
The South Korean government formed some policy on the basis of two assumptions.
The government assumed that market competition would drive the prices of electricity towards the global marginal production cost and therefore productivity would be increased.
The government guessed that the private sectors would be more efficient than the public sector regarding resource allocation.
The government abandoned the monopoly of the Korean Electric Power Corporation (KEPCO) by introducing privatization in the electricity sector. The non-nuclear sections of the KEPCO had been divided into five different generating subsidiaries and each of these was taken for privatization in 2002.
The government’s aim was to separate the distribution sectors and generations from the KEPCO so that it could allow the supplier in the wholesale market. Therefore it would be possible for the retail market to ensure the consumer’s right to select their providers. However, The South Korean nuclear energy programs had been criticized by many countries around the world.
Last Updated on : 26th June 2013