Korea's Proposed LMP Introduction Expected to Face Delays
Discussions on the Korean government's plan to introduce Location Marginal Pricing (LMP) in the wholesale electricity market are expected to be delayed, potentially pushing back the rule revision from Q3 to Q4 2026.
Our take
What factors are delaying Korea's planned Location Marginal Pricing (LMP) introduction, and what are the implications for KEPCO's retail pricing reforms?
The anticipated delay in Korea's wholesale Location Marginal Pricing (LMP) introduction, driven by political pressure from the National Assembly audit and legal threats from private generators, risks decoupling it from KEPCO's planned retail regional pricing reforms, potentially leaving KEPCO in a difficult position regarding industrial electricity price adjustments.
The government's push for LMP has encountered significant headwinds, as private power generators threaten legal action over the proposed emergency rule amendment, fearing adverse financial impacts. Simultaneously, the upcoming National Assembly audit creates a political disincentive for the power authorities to proceed with a potentially controversial reform, leading to an internal discussion about postponing the rule revision. This delay creates a tension with KEPCO's retail reform timeline, especially given the Minister's recent statement on industrial electricity price reductions via regional tariffs, which puts KEPCO under pressure to proceed with its part of the reform even if the wholesale market mechanism is not yet in place.
What the source says
- The government's plan to introduce Location Marginal Pricing (LMP) is expected to be delayed from its original Q3 2026 rule revision schedule.
- The proposed amendment to the Electricity Market Operation Rules, which is central to LMP introduction, was initially slated for emergency submission to the Korea Power Exchange's Rule Revision Committee in September 2026.
- Private coal-fired power generators on the East Coast have reportedly decided to file for an injunction to prohibit the resolution if the emergency amendment is submitted in Q3 2026.
- Some LNG power generators have also requested consultation before an emergency submission, threatening legal action similar to coal generators if ignored.
- The National Assembly audit is scheduled from October 6 to October 27, 2026.
- Kim Seong-hwan Minister Kim Seong-hwan recently stated his intention to lower industrial electricity prices through regional tariffs.
- Industry observers anticipate that the power authorities might postpone the rule amendment submission until Q4 2026 after further consultation with the industry.
- The delay in wholesale LMP could complicate KEPCO's plans to introduce regional retail electricity tariffs by early 2027.
For investors — Investors should monitor the revised timeline for LMP introduction, as its delay could create uncertainty regarding the cost allocation mechanisms in Korea's electricity market and potentially impact the profitability of regional power generation assets.
Watch: Monitoring the revised schedule for the submission of the Electricity Market Operation Rules amendment to the Korea Power Exchange's Rule Revision Committee, especially for a Q4 2026 timeline.
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