Can Seven People Oversee 6,700 Power Companies? Calls Grow to Establish Power Market Supervisory Agency Under the Electricity Commission

Calls Grow for Establishing an Independent Supervisory Body
to Strengthen Oversight of the Rapidly Expanding Electricity Market

Heo Seongmu, a member of the Democratic Party of Korea (center in the photo), is delivering a greeting at the 'Electric Power Industry Regulation Governance National Assembly Seminar' held at the National Assembly on the 28th. Photo by Heo Seongmu's Office

With the rapid increase in private power generation companies, there is growing support for establishing a new organization to oversee the electricity market. There are calls to create a Power Market Supervisory Agency under the Electricity Commission to strengthen the monitoring and supervision of the electricity market.

On August 28, Professor Sungkwan Joo of the School of Electrical and Electronic Engineering at Korea University argued at the "Electric Power Industry Regulation Governance Seminar," co-hosted at the National Assembly by Assemblyman Heo Seongmu of the Democratic Party of Korea and the Korean Institute of Electrical Engineers, that "a Power Market Supervisory Agency should be established under the Electricity Commission, and this independent regulatory body should be responsible for monitoring the market to promote competition in the electricity market."

Currently, monitoring of the domestic electricity market is conducted by the Electricity Market Monitoring Committee under the Electricity Commission. This committee consists of nine members, including government officials. The actual support work is carried out by the Market Surveillance Office of the Korea Power Exchange.

Meanwhile, the electricity market is expanding rapidly. The number of power generation companies, based on Korea Power Exchange membership, has increased from 13 in 2001, when the market was first launched, to 6,942 as of 2025. The proportion of power generation facilities outside of Korea Electric Power Corporation rose from 13.8% in 2010 to 42.4% in 2023. This significant increase is largely due to the expansion of renewable energy sources such as solar and wind power.

Professor Joo stated, "With the growing number of market participants, there is an increasing need to ensure fairness and strengthen the market surveillance function in the electricity market." He added, "The Market Surveillance Office of the Korea Power Exchange has only seven staff members, which limits the operation of the monitoring system. To enhance fairness and strengthen the market surveillance function, a reorganization of the monitoring system is necessary."

In particular, the domestic electricity market is set to shift from the current Cost Based Pool (CBP) to a Price Based Pool (PBP), raising the need to further strengthen market surveillance. The electricity authorities (Ministry of Trade, Industry and Energy) plan to transition from the current day-ahead bidding system (CBP) to a PBP system focused on price bidding.

In the United States, the Federal Energy Regulatory Commission (FERC) is responsible for regulating and monitoring wholesale markets, including independent system operators (ISOs) and regional transmission organizations (RTOs). Additionally, both internal and external Market Monitoring Units (MMUs) are established within and outside ISOs to oversee market surveillance.

Professor Joo pointed out, "In Korea, the Market Surveillance Office of the Korea Power Exchange is in charge of market surveillance, but there is no organization overseeing the Korea Power Exchange itself." He emphasized the need for a supervisory body to oversee the electricity market and investigate unfair practices to ensure transparency and improve market efficiency. He suggested establishing a hybrid electricity market monitoring system composed of a market supervisory body and the Market Surveillance Office of the Korea Power Exchange.

Professor Seongkwan Joo of Korea University proposed improvements to power regulation governance. Presentation materials by Professor Seongkwan Joo.

Specifically, Professor Joo proposed that the Electricity Market Monitoring Committee should function within the Electricity Commission as an entity with the authority to direct investigations and impose sanctions, while an external Power Market Supervisory Agency should be established to further strengthen market oversight.

He also emphasized the need to grant the Electricity Commission the authority to approve rates, thereby enhancing key regulatory functions and independence.

Professor Joo stated, "The current structure of 'review by the Electricity Commission and decision by the Ministry of Trade, Industry and Energy' is essentially just a proxy review. The Electricity Commission should be given decision-making authority and should be able to determine rates rationally by gathering input from various stakeholders." He added, "The issue of dual regulation, with the price authorities (Ministry of Economy and Finance) intervening, should be abolished or minimized."

On the same day, Lee Yoosu, Senior Research Fellow at the Korea Energy Economics Institute, also stressed the need to establish a grid monitoring body.

Lee Yoosu said, "A reliability monitoring agency should be established as a subordinate structure of the Electricity Commission to assess the appropriateness of grid operations." He added, "The Korea Power Exchange should be relieved of some of its regulatory duties and focus on its core functions of market and grid operation."

In this regard, Assemblyman Heo Seongmu of the Democratic Party of Korea previously sponsored an amendment to the Electric Utility Act in May, aiming to strengthen the authority of the Electricity Commission and establish a Power Market Supervisory Agency.

Lee Junho, President of the Korean Institute of Electrical Engineers, which co-hosted the event, stated, "A governance reform centered on the establishment of an independent regulatory body will help maintain balance between the government and electricity industry stakeholders, and will contribute significantly to grid operation, market monitoring, and electricity pricing by providing objective and independent functions."

Lee Jongyoung, Chairperson of the Electricity Commission, stressed, "We need to strengthen the independence of the Electricity Commission and reduce the governance dependence on Korea Electric Power Corporation and the Korea Power Exchange. This will prevent conflicts of interest arising from the same entity acting as both player and referee, and we should consider establishing a permanent and professional supervisory body for grid operations."