The government plans to launch a unified power generation company combining five state-run power companies in October next year.

The Ministry of Climate, Energy and Environment held a meeting at the Korea Electric Power Corporation (KEPCO) Namseoul Headquarters in Yeongdeungpo-gu, Seoul, today (Sept. 4) to unveil additional details regarding the consolidation plan for the five power generation public enterprises.

Yesterday (Sept. 3), as part of a public institution function reform initiative, the government announced it would merge the five power generation subsidiaries of KEPCO into a single corporate entity tentatively named "Korea Power Generation."

The ministry revealed a schedule to complete the corporate establishment registration and executive appointments for the unified power company by September next year, followed by its official launch on October 1.

The unified company's headquarters will feature four main divisions—renewable energy, a just transition, safety technology, and planning & management—alongside three to four regional renewable energy headquarters and thermal power headquarters.

Currently, each of the five power companies has its own president, auditor, and a total of 10 executive directors. Once the unified company is formed, the number of presidents and auditors will be reduced to one each, while executive directors will be streamlined to four headquarters division heads.

The headquarter staff of the unified company will number around 1,800, a decrease of 600 from the current total of approximately 2,400 across the five existing headquarters. This reduction of 600 personnel is planned to be redeployed to regional renewable energy headquarters.

Regional thermal power headquarters will be maintained as they are, taking into account "stable power plant operations and safety."

As coal-fired power generation is subsequently phased out, personnel will be reassigned and transitioned to renewable energy headquarters when necessary.

Regarding the headquarters location, which is a major point of interest for local governments, the government stated that the existing buildings of the five power companies are too small to utilize effectively.

Consequently, a new headquarters will be built. Its location will be determined in connection with the second-phase public institution relocation policy, after comprehensively considering the current locations of power enterprises, the impact on a just transition, and residential and working conditions.

The headquarters of the five power companies are currently located in Boryeong and Taean in South Chungcheong Province, Jinju in South Gyeongsang Province, Busan, and Ulsan.

The unified power company will remain a wholly owned subsidiary of KEPCO, just like the current power companies.

Given that KEPCO is listed on the U.S. stock market and that electricity serves as a core national infrastructure requiring public utility, KEPCO is expected to retain 100 percent of the stakes in the unified company.

The government anticipates that integrating the power companies will generate cost-reduction effects by centralizing fuel purchasing and facility investments, which are currently handled separately by each firm.

It also expects to mitigate factors driving up electricity rates resulting from the energy transition, achieving "economies of scale" through the large-scale integrated development of renewable energy generation facilities and energy storage systems (ESS).

The government is pursuing a waiver of the Fair Trade Commission's (FTC) corporate combination review upon the integration of the power companies.

Current fair trade laws lack corporate combination review criteria or exceptions tailored for public enterprises.

However, because merging the five power companies into one raises significant concerns about hindering competition in the power market as a dominant business operator, the policy to exempt the combination review is likely to spark considerable controversy.

The government aims to enact a special law containing the legal basis for exempting the corporate combination review during the regular session of the National Assembly this year.

The special law is expected to include provisions for establishing the legal basis of the unified power company, deemed authorization and licensing related to the power generation business, succession of rights, obligations, and employment contracts of existing power companies, streamlining merger procedures, and easing tax burdens.

The Ministry of Climate, Energy and Environment plans to establish and operate a "Power Generation Public Enterprise Integration Preparation Committee" chaired by the Second Vice Minister within this month. Once the special law is enacted and an integration promotion committee is formed, it will take over the duties of the preparation committee.

(Photo: Yonhap News)