Effectiveness of Korea's proposed regional industrial power tariff debated
The Korean government and Korea Electric Power Corporation (KEPCO) are promoting a proposed 'Industrial Regional Electricity Tariff System' (LMP), but its effectiveness in achieving regional balanced development is under debate.
Our take
Will Korea's proposed regional industrial power tariff attract new load outside the capital area?
Korea's proposed regional industrial tariff would mostly discount existing users outside the capital area, and whether it draws new load depends on zones and discount rates that KEPCO has not set.
A broad regional discount mainly rewards load that is already there, while narrow zones or terms for new load would target relocation. Zones and rates are not set, and KEPCO's funding for the expected revenue loss is unspecified.
What the source says
- Korea Electric Power Corporation (KEPCO) and the government are promoting an 'Industrial Regional Electricity Tariff System' (LMP).
- Korea Electric Power Corporation The proposed system aims to lower industrial electricity tariffs in non-capital areas by up to 10% by reflecting transmission and distribution costs and regional power self-sufficiency rates.
- As of 2025, 66.8% of total industrial power sales (187,311 GWh) were consumed outside the capital area, while the capital area accounted for 33.2% (92,911 GWh).
- Korea Electric Power Corporation KEPCO's internal analysis projects an annual sales revenue reduction of approximately 2.8 trillion won if the proposed system is introduced.
- Lee Heon-seung Rep. Lee Heon-seung questions if an annual investment of 2.8 trillion won will lead to actual corporate relocation, given that two-thirds of industrial power is already consumed outside the capital area.
- Lee Heon-seung Rep. Lee Heon-seung argues that the proposed system risks becoming a large-scale discount benefit for existing non-capital area businesses rather than effectively inducing new corporate relocation.
- KEPCO's proposed funding plan for the system, which includes 'power market efficiency + alpha', self-funding, and some government financial support, is criticized for lacking specificity.
- Lee Heon-seung Rep. Lee Heon-seung urged a thorough review of corporate relocation effects, transmission network cost savings, and KEPCO's financial burden before rushing to introduce the system this year.
For investors — Corporate buyers planning new sites should not price a regional discount into site selection until zones, rates and any treatment of new versus existing load are set.
Solar and wind developers should check final rates before pricing PPAs, since a lower industrial tariff in generation-rich regions would narrow the saving a PPA offers buyers there.
Watch: Monitoring the finalized detailed design and funding plan for the Industrial Regional Electricity Tariff System, including specific zones, discount rates, and the extent of government financial support, as well as the outcome of the urged thorough review.
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