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

This paper aims to measure the contribution of merchant provider in power market of Korea. Private merchant power providers have participated in the market very actively. The role is very significant in building competitive environment in power market, considering their market share is very low. The role of the merchant power provider - direct LNG importer is estimated using the real market data of last three years. The contribution estimated is 270 billion won in 2006, 420 billion won in 2007, and 870 billion won in 2008. This reduction in total transaction provides lower electricity price to the consumers. According to the regression model, the two significant determinants are the amount of the generation of the private plant and the SMP level in the power market. The participation of the private power shows very significant contribution in promoting the competition in the market in spite of the small share. The conclusion of the paper is that we need to enhance the competition among suppliers in order to build stable electricity market for the consumer.