1. The present condition and the prospect of the electric power industry in Korea

1. An abbreviated history of the electric power industry in Korea

– 1898: Hansung Electricity Inc., the first electric power company in Korea, was established.

– 1898~1946: This period was flooded with 70~80 electric power companies and maintained a monopoly in small areas.

– 1946~1960: Merged into 3 electric power companies: Kyungsung Electricity (power distribution), Namsun Electricity (power distribution), and Chosun Electrical Industry (power generation and power transmission)

– Since 1961: Merged into Korea Electric Power Inc. to promote the development of power resources and to operate electric power industry rationally

– 1967~1968: A new project permit for Donghae Steam Power, Honam Steam Power, and Kyungin Energy (private capital development, PPA)

– Since 1982: Conversion to the Korea Electric Power Corporation

– Since 1988: The first attempt at privatization of the Korea Electric Power Co. (national stock system)

– Since 1994: Suspension of the privatization of the Korea Electric Power Co. due to stock market burden and political situation

– Since July 1998: Announcement of the privatization of the Korea Electric Power Co. (KEPCO)

– Jan. 21, 1999: An announcement was made regarding the reorganization plans for the electric power industry.

– Sept. 1999: The laws about the promotion of the reorganization of the electric power industry were introduced to the National Assembly.

2. The present condition of the Korea Electric Power Co.

– KEPCO operates by integrating the generation, transmission, distribution, and sales of power in Korea. As of the end of 1998, we had a total of 34,500 employees, total assets of 42.5 billion dollars, and annual sales of 12.7 billion dollars.

– The KEPCO generation facility is 43 million kW and constitutes 7% of water power, 65% of steam power, and 27% of nuclear power.

– The voltages of the transmission system are 345 kV, 154 kV, and 66 kV. At present, the construction of the transmission lines and transformer substations are being promoted.

– The distribution system is operated with a single voltage of 22.9 kV and a low voltage system supplied mostly with 380 V and 220 V.

– As of Dec. 1998, the number of customer houses was 14,102,163 and the electric supply rate reached 99.9%.

3. The present condition of the electric power industry in Korea

1. The environment of the electric power industry

– Korea is a peninsula surrounded with ocean on all 3 sides, and has a particular situation where North and South are opposing each other.

– As of the end of 1997, the amount of energy used in Korea was 175 million TOE, but we are almost completely lacking energy resources and depend on imports of 97.2%.

– It is impossible for electricity to have adaptability with neighboring countries, so it is provided for ourselves using electric power facilities in Korea, but the demand is increasing by more than 10% yearly.

– The electric power industry in Korea is a national public utility and KEPCO monopolizes its operations in the generation, transmission, distribution, and sales, and the government holds 51% of KEPCO stocks.

– The government had kept 56% of KEPCO stocks until March 1999, but sold 5% of its shares through the issue of depository receipts (DR) on Mar. 26, 1999.

2. The current condition of electric power facilities

– Power generation facilities

(Unit: 1000 kW)

Classification	1960	1970	1980	1990	1998
Water power	143	329	1,157	2,340	3,117
Steam power : LNG	-	-	-	2,550	9,518
Oil	1	1,642	6,897	4,815	7,710
Coal	223	537	750	3,700	11,220
Nuclear power	-	-	587	7,616	12,016
Total	367	2,508	9,391	21,021	43,561

– Power transmission, transformation, and distribution facilities

Classification	1960	1970	1980	1990	1998
Transmission lines (C-km)	5,237	7,316	12,686	19,432	24,917
Transmission capacity (MVA)	1,209	3,423	19,108	51,684	112,990
Distribution lines (C-km)	9,171	21,002	122,919	231,263	336,702

– The current condition of electric power production

(Unit: million kW)

Classification	1960	1970	1980	1990	1998
Water power	653	1,221	1,984	6,361	6,099
Steam power : LNG	-	-	-	9,604	26,302
Oil	-	7,079	29,297	18,857	17,712
Coal	1,120	867	2,481	19,961	75,498
Nuclear power	-	-	3,477	52,887	89,689
Total	1,773	9,167	37,239	107,670	215,300

– The current condition of electric power sales

(Unit: million kW)

Classification	1960	1970	1980	1990	1998
Household use	-	-	5,317	17,735	32,912
Public use & service	-	-	4,504	17,400	51,729
Industrial use	-	-	22,913	59,248	108,829
Total	1,189	7,739	32,734	94,383	193,470

3. The future prospect of the electric power industry

– Outlook for generation facilities capacity and maximum demand

(Unit: 10,000 kW)

Classification	1998	2000	2005	2010	2015
Capacity	4,356	5,027	6,459	7,642	8,256
Maximum demand	3,524	3,961	5,338	6,327	7,109

– Outlook for facilities composition by target year

(Unit: 10,000 kW)

Year	Nuclear power	Coal	LNG	Crude oil	Diesel fuel	Water power
1998	1,201	1,140	1,221	442	78	313
2000	1,372	1,410	1,344	436	78	388
2002	1,572	1,592	1,589	436	12	388
2004	1,672	1,873	1,645	447	12	488
2010	2,443	2,130	1,845	510	23	691
2015	2,895	2,272	2,025	450	23	691

2. The privatization of the electric power industry in Korea (the reorganization)

1. The promotion outline

• To introduce competition to the electric power industry that is a monopoly and then to increase the efficiency of the power supply.
• To guarantee an inexpensive and stable supply of electric power in the long run
• To promote convenience through the extension of consumers’ options in the use of the electric power

1. Basic objects

• Introduction of competition by dividing power generation section into several power generation companies.
• Operation of stepwise privatization of divided power generation companies.

– Long-term plans

• Introduction of competition in the wholesale and retail of electric power by dividing power distribution section into several distribution companies by regional groups.
• Opening of the power transmission network and the creation of competition circumstances by securing private companies to use a nationwide transmission network.

1. Stepwise promotion objects

0. The first step: the preparation step (1999.1 ~ 1999.12)

• Revision of laws and ordinances
• Investigation of assets and division of the company
• Establishment of subsidiary companies in power generation section (one of subsidiary companies will be sold in 1999)
• Preparation of bidding market in the power generation section

1. The second step: the competition step in power generation

(1999.10 ~ 2002)

• Enforcement of the privatization in the power generation section (1999.10 ~ 2002).
• Operation of competitive system between power generation companies.

– Division and privatization of the power distribution section

• Division of the power distribution subsidiary companies (2000 ~ 2001)
• Beginning of privatization (2001 ~ 2002)

– Establishment of an independent regulation system

• Establishment and operation of a government Committee on Electric Power (1999.2)
• Establishment of an institution for electric power management (2001)

– Preparation for the electric power bidding market in both directions (2000 ~ 2002)

• Enactment of the POOL operation regulations
• Training of the operation personnel
• Establishment of facilities and software

– Direct transaction permission for large-capacity electric power customers

1. The third step: the wholesale competition step (2003 ~ 2009)

• Operation of electric power transaction system by free competition of power generation companies and power distribution companies.
• Each power distribution company operates a district jurisdiction distribution network and builds and applies its own electric bill system.

1. The fourth step: the retail competition step (After 2009)

• Removal of the regional monopoly in the power distribution section due to the opening of the power distribution network
• Appearance of new types of business conditions, such as consumer association and marketing business, specialized in electric power

1. Problems

1. Countermeasure to the privatization of electric power industry

1. Introduction of The Korean National Electrical Workers Union(KNEWU) – separate pamphlet attached
2. Organization of the nation-wide countermeasure committee against the selling of the electric power industry on the overseas installment plan

1. Organization details

• An advisor of the Association of Catholic Priests for Justice Embodiment, a representative of the Christian Councils for Social Movement, and a vice president of the Buddhist Chogye Order, representing the Korean religion circle, are in charge of joint representatives.
• The publisher of the Nodong daily, which represents the laborer and the common people, is in charge of the chairman of the executive committee.
• Heung Sa Dan, Korea’s representative social organization, and the National Association of Professors for Democratic Society were also participated.
• Among labor organizations, The Korean National Electrical Workers Union(KNEWU), the Korea Gas Corporation Labor Union, the Korea Plant Service & Engineering Co., LTD Labor Union, the Korea Electric Power Industrial Development Labor Union, the Korea Electrical Safety Corporation Labor Union, the Korea District Heating Corporation Labor Union are participated.

– The nation-wide countermeasure committee clarified about the organization background and struggle policy as follows.

• They advocated that the selling of the electric power industry to supranational capital would introduce a tremendous outflow of national resources and the nation would lose its economic sovereignty. Also, they clarified that they would spread out the national opposition movement to stop this.
• According to this, a 10 million signature-collecting drive, a street campaign, holding a public hearing and an open forum, and a large-scale assembly will be advanced.

1. Principal activities

– There has been street campaigns and 10 million signature-collecting drives all over the country since Jan.15, 1999.

– On Jan.21, 1999, 123 people from every circle of society announced a public statement to protest the government policy.

– Large-scale assemblies have been held in major cities of the country since March 1999.

– An interview was carried out to persuade members of the National Assembly and a standpoint of the nation-wide countermeasure committee was delivered.

– The standpoints of the nation-wide countermeasure committee and the injustice of the government policy were publicized in daily newspapers.

– The injustice of the government policy has been informed to the people through the participation in debate programs in TV and radio.

– By holding a public hearing or open forum, many problems have been pointed out.

2. Future activity plans

1. The struggle of workers in the electric power industry

0. The struggle policies

– The struggle of workers in the electric power industry informed the people by making bad influences on national economy rather than employment problems an object of criticism, and tried to secure legitimacy from the support of the people.

– For the first step, signature-collecting drive, street campaigns and crowd gatherings were led according to the guide of the nation-wide countermeasure committee.

– For the second step, the formation of public opinions of the people and the capability of the organization inside the labor union were strengthened by extending the structure of the labor union to an emergency system.

– For the third step, which will be developed in the future, the privatization policy of the government will be deterred through serious use of force - strikes.

1. The details of the struggle subjects

– Workers in the electric power industry have led successful assembly by drawing large-scale number of people in the gatherings held all over the country centering around the labor union.

– We have led a trigger role in 10 million signature-collecting drives and national campaign movements.

– On June 25, 1999, the national representatives meeting, which is the highest legislative organization of The Korean National Electrical Workers Union(KNEWU), was held and the structure of the labor union was reorganized into an emergency system.

– On July 1, 1999, a demonstration against the government policy was performed by holding large-scale gathering with the participation of 10 thousands workers in front of the Seoul Station.

– On July 1999, we decided to raise a fund to provide for the sacrifice of workers such as imprisonment, deaths, and injuries.

– We have put advertisement against the privatization policy of the government in major Korean daily newspapers since July 1999.

– On August 1999, the strike was decided by taking a vote for the strike decision of workers and the timing was set to follow the decision of a guidance division.

– On September 1999, we decided to extend the emergency countermeasure committee to prepare the strike.

– On Sept.14, 1999, 6 labor unions in the electric power industry decided to form a united front and organized joint struggle committee.

– The National Labor Union in the Mining Industry decided to expand joint struggle, and at present time their guidance division is going on a indefinite hunger strike shutting down the mine entrance inside a mining pit of a coal mine in Kangwon-do.

2. The future struggle plans