The nation’s electricity market, which has long been dominated by state-run Korea Electric Power Corp., will soon face restructuring as the Energy Ministry reportedly launched a research project in efforts to improve market conditions.

The ministry’s research plan was confirmed by Rep. Choo Mi-ae of the main opposition Democratic Party on the final day of the National Assembly’s regular government audit session.

“We found that the ministry’s energy and resources policy division made a proposal to state-run Korea Energy Economics Institute for a study on how to advance the nation’s electricity market,” the lawmaker said.

“The proposal said that a focus of the study must be placed on finding ways to bring competition to the power market along with the creation of an energy demand management market.”

Competition is currently limited to the power generation market, while KEPCO is the sole dominant player in the power transmission, distribution and retail markets.

“Particularly considering the fact that the Korea Energy Economics Institute, which is led by newly appointed Sonn Yang-hoon, is carrying out the study, it is highly likely for the government to allow more players to enter the power sales (or retail) market,’’ Choo added.

Sonn, who served as an energy policy development expert for the Presidential Transition Committee, has advocated market-driven energy policy reform.

In a recent interview with The Korea Herald, Sonn also hinted the government would seek a paradigm shift to consumer- and market-driven energy policy. One possible path to a policy transition, he noted, is to introduce competition to the electricity retail market currently dominated by the Korea Power Exchange under KEPCO.

One reason the government is targeting the retail sector in reforming the electricity market is because increased competition is thought to bring more innovative, technology-based energy solutions, which would appeal to consumers and create a new market.

In 1999-2000, third-party access to the electricity retail market was discussed, but the plan was suspended in 2004 for political reasons.

Industry watchers forecast a limited opening of the electricity retail market to big power users like companies for the time being, while KEPCO will continue to control sales to households and commercial power spenders to prevent utility price fluctuations.

By Seo Jee-yeon (jyseo@koreaheraldcorp.com)