On the 23rd, Korea Electric Power Corporation President Kim Dong-cheol said, "If it is difficult to set electricity rates in line with fuel costs, it is right to abolish the distorted direct power purchase system."
At the National Assembly's Committee on Climate, Energy, Environment and Labor audit that day, when Rep. Jeong Hye-gyeong of The Progressive Party pointed out that "some large corporations are exploiting the direct power purchase system," Kim stated accordingly.
The direct power purchase system, introduced in 2003, allows users to purchase electricity directly at the system marginal price (SMP) from power generators and others in the wholesale electricity market. Until 2023, when KEPCO's electricity rates were low, almost no corporations used it, but over the past three years industrial electricity rates have been raised eight times, and some large corporations are turning to direct purchases.
In response, Rep. Jeong asked Kim, "We need to make grid usage fees realistic for corporations that 'cut and run' through the direct power purchase system. Large corporations are exiting through direct power purchases while the public shoulders the burden, and that is not a fair market."
Kim explained, "The original purpose of the direct power purchase system was to promote competition in the electricity market and prevent unfair increases in electricity rates."
He went on to say, "From 2021 to 2023, when international fuel prices surged, KEPCO absorbed losses to ease the burden on the public and corporations," adding, "While KEPCO is carrying the accumulated deficit, some corporations have adopted the direct power purchase system and are clearly exploiting the system's blind spots."
He also stressed, "A system operation faithful to market principles—reflecting higher electricity costs in rates when international fuel prices soar and lowering rates when costs fall—is the fundamental solution," adding, "If the market price-setting mechanism does not function properly, it is right to abolish the direct power purchase system."