Bill establishing 'FSS for the power sector' to pass this year; launch accelerated for next year

[Financial News] The government is accelerating legislation to establish the Electricity Supervisory Agency, which would specialize in overseeing the power market and power system. Although completing the relevant legislation by the first half of next year had initially been under discussion, the schedule is being moved up to establish a legal basis by the end of this year and launch the agency next year.
According to government and National Assembly sources on the 23rd, a bill to amend the Electric Utility Act, which would provide the legal basis for establishing the Electricity Supervisory Agency, is scheduled for review by the Legislation and Judiciary Committee of the National Assembly on the 28th. Beginning with the committee's review, the government plans to complete the bill's passage by December after undergoing the October parliamentary audit and the November review of the budget bill, thereby finalizing the legislation within this year.
The Electricity Supervisory Agency is a public institution that specializes in monitoring and supervising the power market and power system. Its central objective is to reorganize supervisory functions currently dispersed across the Ministry of Climate, Energy and Environment, the Electricity Commission, Korea Electric Power Corporation (KEPCO), and the Korea Power Exchange (KPX), while separating policymaking, market and system operations, and oversight. Under the proposed structure, the Ministry of Climate, Energy and Environment would formulate policy; KEPCO and KPX would operate the market and system; the Electricity Commission would deliberate and make decisions; and the Electricity Supervisory Agency would conduct investigations and evaluations.
The backdrop to the government's push for the agency's establishment is a power market that has become rapidly more complex amid the expansion of renewable energy. According to materials from a National Assembly forum, the number of KPX member companies grew from 10 in 2001 to 7,559 in 2025, an increase of more than 700-fold. As the number of market participants has surged, stakeholders have increasingly clashed over major changes to key systems, while critics say there is a shortage of specialized oversight capable of making independent judgments.
KPX also believes that operations and oversight should be separated. Kim Hong-geun, KPX's vice president for technology, pointed out, "There has never been a supervisory institution in the power industry with independence and expertise." The ministry responsible for the sector handles policy, industry promotion and regulation together, while the Electricity Commission has difficulty conducting continuous, specialized oversight under its current secretariat structure. KEPCO and KPX also have expertise, but their role as stakeholders subject to the relevant rules limits them.
There have also been cases in which regulations failed to keep pace with the rapidly changing power industry. Germany established voltage fluctuation response standards for inverter-based generation facilities such as solar power in 2015, and the United States did so in 2022, but South Korea did not introduce them until 2025. KEPCO currently handles interconnection standards for transmission and distribution networks, while KPX is responsible for market and system operating rules. This has prompted calls for an entity separate from the operating institutions to verify whether the standards are appropriate and being properly implemented.
Discussions on establishing an Electricity Supervisory Agency have taken place in the past as well. Following the rolling blackouts in 2011, the need for oversight of grid reliability was raised, and the establishment of a Power System Supervisory Agency was discussed in 2013. The effort was abandoned, however, amid concerns about duplicated functions and overlapping regulations. Japan, by contrast, pursued power system reforms after the Great East Japan Earthquake and established the Organisation for Cross-regional Coordination of Transmission Operators, Japan (OCCTO) and the Electricity Market Surveillance Commission in 2015.
[email protected] Kim Kyung-min and Song Ji-won Reporter