Private experts point out’concerns about damage to net neutrality’ at discussion forum
“It should be faithful to the original business rather than participating in the renewable power generation business”
[에너지신문] “KEPCO’s entry into the new and renewable power generation business cannot guarantee the neutrality of the power grid. If it participates, it is necessary to create an independent company that separates and operates the transmission and distribution part.”
Experts who participated in the’Energy Conversion Forum, Climate Solution, Wind Industry Association, Private Power Generation Association, and National Federation of Civil Power Cooperatives’ co-hosted the’Entrance to power generation business of KEPCO and the loss of net neutrality, is it okay?’ Collected.
This day’s discussion session, which was broadcast live on YouTube, was prepared in a situation where voices of opposition were growing, mainly from private power generators, while a law permitting KEPCO to participate in power generation projects was being promoted. They argue that KEPCO’s entry into the power generation business is not just a public corporation’s expansion of its business area, but a critical issue that can shake the structure of the existing power market.
Members of the National Assembly and KEPCO, who are pursuing the bill, believe that if KEPCO with business capabilities directly invests capital and participates in power generation projects, it will be advantageous in terms of economic performance, business operation, and resident acceptance. On the other hand, private power generation companies are strongly opposing that due to KEPCO’s participation, fair competition with power generation companies is difficult, and net neutrality is undermined as KEPCO monopolizes transmission and distribution and sales.
Prof. Young-Hwan Jeon from Hongik University, who gave the first presentation, emphasized that “The development of the power market starts from the problem of net neutrality. Maintaining net neutrality is the basis for power generation and sales competition.”
Professor Jeon pointed out that there are many discriminatory incentives from other power generation companies when network operators (KEPCO) directly participate in power generation projects. It is said that unfairness in rulemaking, discrimination in the priority of network investment, asymmetry of information resulting from possessing all the information on the network, and fairness issues regarding renewable energy bidding and output restrictions may arise.
Professor Jeon argued that “energy conversion is possible only when there is separation of functions in the power industry and fair competition,” and “(when KEPCO participates in the power generation business) the transmission grid should be separated into a separate company.”
The most worrisome part of KEPCO’s participation in power generation projects is the loss of net neutrality, which in turn prevents fair market competition, so it is necessary to establish an independent power grid company.
As the second speaker, Yoo-Soo Yoo, a senior research fellow at the Energy Economics Research Institute, appeared. Commissioner Yoo Soo Yoo pointed out, “The Korean power market is a structure in which KEPCO monopolizes the transmission, distribution and sales sectors, and most consumers purchase electricity from KEPCO, and only a certain amount of electricity is traded in the wholesale market.”
According to Lee, in the case of foreign countries, competition for survival between existing utilities is taking place under the liberalization of the retail market and competitive market conditions, and traditional power generation businesses are shrinking due to energy conversion and decentralization, while new renewable and distribution network businesses are expanding. In particular, the transmission and substation business is performed by a separate independent network operator, and is showing a difference from Korea as the focus is on maintaining network neutrality and fairness.
Commissioner Lee said, “We need to promote efficiency in the electricity market by creating conditions for fair competition and revitalizing market price functions. There should be no discrimination when using transmission and distribution networks, and in the long run, gradual price liberalization through retail market opening should be supported.” Emphasized.
In the following comprehensive discussion, experts from related academic circles and associations participated and expressed their views.
Shin Dong-han, executive director of the National Federation of Civil Development Cooperatives, said, “If an energy public enterprise participates in a private business, it should not impede the investment factor.” “If a monopoly network operator (KEPCO) directly participates in the power generation project, there is concern that it will hinder fair competition. “It is done.”
In addition, he pointed out that “if you participate to contribute to energy conversion as an energy public company, you must show sincerity.” “Even though the power generation subsidiary is already conducting business, if the parent company participates, sufficient reasons and explanations should follow.”
“The participation of KEPCO, which monopolizes transmission and distribution in the power market, means that fair competition and win-win growth between the public and private sectors are impossible.” It promises restrictions, but there are no specific figures for this,” he criticized.
He added, “It is not the scale of participation that matters. It is a concern that KEPCO will enter the private sector and destroy the ecosystem of the renewable energy industry.”
“If KEPCO enters the renewable energy power generation business, the monopoly structure of public corporations will inevitably deepen,” said Park Tae-hwan, chairman of the KEPCO’s power generation union policy. “KEPCO’s participation in the renewable energy market, which monopolizes the power transmission and distribution network, can undermine fairness. KEPCO should invest in network conversion for’just energy conversion’.
Next, Park Won-ju, secretary general of the Private Power Generation Association, said, “There is a lack of justification for entering the power generation business of the parent company KEPCO as power generation subsidiaries already perform 80% of their RPS obligations.”
In addition, Director Park Won-ju pointed out that “the slow supply of new and renewable energy is not a problem of capital, but a problem of economic and receptivity,” and “the direct participation of KEPCO has structural equity problems.”
If KEPCO participates, he argues that the loss of net neutrality will definitively go back from the current company separation state (KEPCO-generation subsidiary) to the accounting separation state.
Director Park said, “Investing in new and renewable power generation projects that KEPCO should focus more on infrastructure investment will lead to a decrease in efficiency due to diversification of investments.” You must be faithful to your public role.
Lastly, Kwon Kyung-rak, director of Climate Solutions, said, “KEPCO claims that it will ensure neutrality by strengthening accounting management, but it is unreliable,” he said. Business expansion is seen as a priority.”
Director Kwon added, “The premise of KEPCO’s participation in the new and renewable power generation project is that the transmission and distribution should be separated,” and added, “KEPCO needs to proactively propose specific plans.”
As such, private experts mostly viewed KEPCO’s participation in power generation projects negatively. However, if network neutrality such as separation of transmission and distribution is guaranteed, there is a possibility that the atmosphere may change, so KEPCO’s response to this is drawing attention.
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