Rep. An Ho-young Proposes Bill to Integrate Five Power Generation Companies

Five Power Generation Companies Integration Bill: What Changes?

A bill proposing the merger of five power generation companies, which produce nearly half of South Korea's electricity, has been submitted to the National Assembly. Democratic Party Rep. An Ho-young, along with lawmakers from the Jeonbuk region, decided to lead the proposal for the "Korea Electric Power Corporation Act," which aims to integrate five power generation subsidiaries: Korea Hydro & Nuclear Power (KHNP), Korea South-East Power (KOSEP), Korea Midland Power (KOMIPO), Korea Western Power (KOWEPO), and Korea East-West Power (EWP). Scheduled to be introduced on the 24th, this bill is significant as it brings discussions regarding the integration of power generation subsidiaries—which were pursued during the Lee Myung-bak administration but fell through 15 years ago—back to the legislative forefront.

Background of the Bill — Scattered Power Companies, Unstable Regional Economies

Established in 2001 after the generation division of Korea Electric Power Corporation (KEPCO) was spun off, six power generation subsidiaries have operated under a competitive system, each with headquarters in Seoul and local provinces. However, there have been persistent criticisms that maintaining separate headquarters organizations and management personnel for each company has led to accumulated costs from redundancy. There was also criticism that handling power plant construction and fuel procurement separately for each company prevented the realization of economies of scale.

The calculations of regional political circles are more pragmatic. For regions like Muju, Jeollabuk-do, which host nuclear fuel storage facilities and power plants, determining where the headquarters or core businesses of the merged entity will be located directly impacts jobs and tax revenue. Rep. An Ho-young's preparation of the bill with the Jeonbuk caucus is interpreted as a strategy to reflect regional interests in the law during the integration discussions.

Key Content and Targets

The core of the bill is to integrate the five power generation companies into a single "Korea Electric Power Corporation," reorganizing it as a sole power generation entity within the KEPCO group. It is notable that KHNP is included in the integration targets. The plan is to manage nuclear, hydro, thermal, and renewable energy under one umbrella to unify power supply plans and increase bargaining power in fuel purchasing and facility investment.

Industry insiders view that organizing overlapping headquarters functions upon integration could yield administrative cost savings amounting to hundreds of billions of won annually. However, there are also significant counterarguments that combining the five companies would create a massive state-owned enterprise with assets worth tens of trillions of won, potentially generating new costs such as personnel transfers during the organizational merger and the rigidity of decision-making in a giant organization.

Debate — Efficiency vs. Stability

Proponents argue that redundant investments among scattered power generation companies amount to waste during the energy transition period. They point out that with the business boundaries between KHNP, responsible for nuclear and hydro, and thermal power companies becoming blurred, corporate barriers actually hinder the closure of power plants and the transition to new businesses. Local governments and labor unions, worried about the downsizing of regional branches, are making the location of the headquarters and employment guarantees conditions for their support.

Advocates of a cautious approach raise issues regarding the speed rather than the direction of the integration itself. They argue that governance issues, such as the string of arrests of power company executives in the early 2010s over the "half-price nuclear power" bid-rigging scandal, must be resolved before creating a giant organization. There are also voices that the impact on consumer electricity rates must be considered, as whether cost savings lead to rate reductions depends on regulatory design.

Legislative Outlook — Passage Prospects and Variables at the National Assembly

As the ruling party has declared a sprint on livelihood legislation and is aligning policies with the government through high-level party-government talks, the likelihood of the state-owned enterprise restructuring bill drifting has diminished. However, since the integration of power generation companies falls under the Ministry of Trade, Industry and Energy and involves the governance structure of the entire KEPCO group, the government's official position needs to be confirmed first.

Legislatively, the bill will proceed through the National Assembly inspection, Bill Review Subcommittee, Legislation and Judiciary Committee, and finally the plenary session, making it difficult to process without the opposition's consent. Given the complex regional interests, negotiations regarding the location of the headquarters and employment maintenance clauses are seen as the biggest variables in the review process. If the ruling and opposition parties find a compromise in the discussions on the implementation timing and transition methods in the supplementary provisions, the outline of a single power generation corporation system is expected to take shape by next year.