Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

If excessive profits are expected or occur structurally and continuously in the electricity market, it is necessary to regulate profits for generators. In Korea, it applies to low-cost generators such as nuclear power and coal power generators. However, it is very important to regulate at an appropriate level considering the reasonable cost. In this study, we reviewed the adequacy of the level of revenue regulation (based on the rate of return on investment) for KEPCO power generation subsidiaries by two regulatory periods from 2002 to 2018. In the first phase period (2002-2007), the performance rate of return on investment was lower than 0.61%p compared to the appropriate one, and in the second phase period (2008-2018) 2.16%p was insufficient. Especially, it was confirmed that the gap was further widened during the second phase. This is because the revenue regulation was applied as a means to suppress an increase in electricity rates, without taking into account the appropriate cost of power generation subsidiaries.