| 摘要 | ��
Research Purpose
It is hard to imagine an efficient development of an industry without a regulation code well incorporating the circumstances of the industry regulated by the code. The current sales and purchase contract for natural gas for power generation ("gas supply contract" henceforth) functions as a de facto regulation code for the gas and electricity industries.
Korea's gas and power industries have experienced huge changes since the introduction of natural gas to the country in 1986. While there are certain deficiencies within the power market itself in terms of its capability of facilitating effective competition, it is essential that improvements be made in the supply side of gas for power generation. In particular, the current arrangements of gas supply to power generators could become a stumbling block if and when the electricity industry is restructured in a way that allows workable competition between generators.
This study aims to review and derive improvements upon the existing gas supply contract between the Korea Gas Corporation (KOGAS) and the power generating subsidiaries (GENCOs) of the Korea Electric Power Corporation (KEPCO), and, in a broader context, to present policies and measures that support and promote competition in the electricity market. The study provides a brief review of the changes in the gas and electricity industries both in and out of Korea to help understand the issues and problems facing the industries. Upon this foundation, this study reveals major deterring factors to the promotion of competition in the power generation market, as well as some defects in the current gas supply contract as a contract in general. As the incentive distortion involved in the GENCO fuel selection and bidding in the Cost-Based Pool (CBP) market is an important impediment to effective competition, this study offers an analysis of the incentive problem with a simple model �� CBP model.
Summary
The changes in the environment surrounding Korean gas and electricity industries include: a large increase in the flexibility within gas import contracts; an enlarged share of short-term gas deals; and the trend of convergence of gas and power businesses. Direct imports of LNG for own use bypassing KOGAS have appeared and gas consumers seeking direct imports are increasing. In addition, despite the controversial effectiveness of generation competition, GENCOs are said to compete in the CBP market. Both the capability and incentive of swing in gas consumption on the part of GENCOs have decreased substantially, and this tendency is expected to continue owing not only to the generation competition but to the rapid growth of gas consumption for city gas use.
The government's policy objectives and conviction concerned with the gas industry remain in no small part of the current gas supply contract. No substantial efforts have been made to reflect the changing circumstances under which the gas and electricity industries are operating. The menu of gas product and supply services is essentially the same as that of the early years of gas utilization in the country. Bypass of KOGAS for gas for power generation was not allowed until recently. The government, together with KOGAS, through its discretionary power in permitting gas import contracts can be regarded as having employed a strategy of raising rivals' costs by differentiating the time frame for reviewing the applications for gas imports between KOGAS and the GENCOs, implying a narrower platform for gas supply competition on an equal footing. Many clauses look non-commercial while others are obscure in the gas supply contract as a rulebook for a commercial relationship involving huge amounts of money. We can characterize the application of the contract as that of an interruptible supply contract, although the contract itself is written as a firm one. Shortage costs on the consumer (GENCO) side do not seem to be reflected well in the contract. All in all, some core parts of the contract have worked as a source of repeating disputes over compensating extra fuel costs arising from fuel switching, and a potential reason for inefficiently low investment of gas-fired generating units.
The GENCOs are no longer able to enjoy the flexibility in their operation of generating asset portfolio that KEPCO could in the past. This combined with the fact that the GENCOs are competing with each other implies that they have little incentive to meet the KOGAS needs of gas consumption swing in the generation sector. The new scheme, which is under discussion for gas supply applying volume variations to groupings of generators, may turn out to be a regression to the old days of KEPCO monopoly, unless a secondary gas market is allowed where GENCOs trade their surplus and shortage of gas.
The CBP model shows that the current dispatch rule and compensation arrangements in the CBP market prevent GENCOs from excluding expensive generating units in the bidding process. More specifically, the GENCOs that possess both peak- and intermediate-load plants have little incentives for efficient fuel procurement for the peak-load plants, as they could raise their profits by raising their own fuel costs for these units. This type of distortion arises from the CBP operation rule where all bids accepted in the dispatch schedule are settled with the same SMP (System Marginal Price) at the highest variable cost of bidders consisting mostly of fuel costs. To make matters worse, the gas price cannot move following demand and supply situations of gas, and the gas supply contract is a firm one per se, which hinders the dispatcher from scheduling generating units in a way well aligned with gas market conditions. Fixing the gas supply contract alone is not the solution to all the problems and particularly to those arising from the design of the CBP market. However, the task of remedying the gas supply contract becomes even more important in an environment where the structure of the electricity market is expected to change in a way that allows for workable competition.
Research Results & Policy Suggestions
Major improvements on the contract are offered. First, a broader menu of gas supply services is called for including interruptible and priority services. In tandem with the menu expansion, it is of vital importance to amend the system of bidding and compensation in the power market in the direction of correcting the distorted fuel choice incentives. Second, many clauses should be made not only more commercially oriented but also clearer. For instance, the predictability of gas market situation can be enhanced and the potential for disputes can be reduced by indicating in the contract the components and/or events that constitute a bottleneck situation. Third, it is desirable to include a take-or-pay obligation clause in the contract along with permitting the GENCOs means of gas balancing. In order to abide most by the principle of price rationing, the unit period of gas balancing period needs to be shortened and an imbalance penalty be introduced. These arrangements should go in parallel with a secondary gas market for GENCOs' gas trade that can contribute to a higher flexibility of gas balancing. Also, the introduction of a gas supply scheme utilizing a grouping of GENCOs should be backed up by a secondary market. Fourth, the transfer of gas ownership should be defined in more than one dimensions taking into account physical, temporal and economic factors in order to allow gas trades between GENCOs within the KOGAS' gas supply network.
All improvements should be devised from the perspective of fostering market mechanism in that diverse policy objectives may be consolidated in the design of contracts and other trading arrangements, with their values being traded in the market after all. Damage borne by GENCOs ex post due to gas shortage may be avoided ex ante by a wider variety of gas supply services, making it less likely that KOGAS and GENCOs dispute. Enormous changes have occurred in and around Korea's gas and electricity industries but few changes in its gas market. The role of government is clear: to manufacture and maintain a well-designed traffic signal, not to direct the destination of vehicles on the crossroad.
d fuel choice incentives. Second, many clauses should be made not only more commercially oriented but also clearer.
For instance, the predictability of gas market situation can be enhanced and the potential for disputes can be reduced by indicating in the contract the components and/or events that constitute a bottleneck situation. Third, it is desirable to include a take-or-pay obligation clause in the contract along with permitting the GENCOs means of gas balancing. In order to abide most by the principle of price rationing, the unit period of gas balancing period needs to be shortened and an imbalance penalty be introduced. These arrangements should go in parallel with a secondary gas market for GENCOs' gas trade that can contribute to a higher flexibility of gas balancing. Also, the introduction of a gas supply scheme utilizing a grouping of GENCOs should be backed up by a secondary market. Fourth, the transfer of gas ownership should be defined in more than one dimensions taking into account physical, temporal and economic factors in order to allow gas trades between GENCOs within the KOGAS' gas supply network.
All improvements should be devised from the perspective of fostering market mechanism in that diverse policy objectives may be consolidated in the design of contracts and other trading arrangements, with their values being traded in the market after all. Damage borne by GENCOs
ex post
due to gas shortage may be avoided
ex ante
by a wider variety of gas supply services, making it less likely that KOGAS and GENCOs' dispute. Enormous changes have occurred in and around Korea's gas and electricity industries but few changes in its gas market. The role of government is clear: to manufacture and maintain a well-designed traffic signal, not to direct the destination of vehicles on the crossroad.
112 pages, 31 refs., 5 figs., 5 tabs., Language: Korean |
