Candidate Lee Chang-yang's Industry Minister Hearing D-2... Examining the Key Issues

Key Issues in 'Nuclear Phase-Out Abandonment' Outlook... "Resuming Shin Hanul Construction is Desirable"
'Snowballing Deficit' KEPCO Also a Concern... "Market Principles Should Be Reflected in Electricity Rates"
Privatization of KEPCO Ruled Out... Outside Director Experience Likely to Be Questioned

Candidate Lee Chang-yang and Secretary Lee Yong-ho in conversation
(Seoul=Yonhap News) On the morning of the 11th of last month, at the 5th plenary meeting held at the Presidential Transition Committee in Samcheong-dong, Jongno-gu, Seoul, Lee Chang-yang, candidate for Minister of Trade, Industry and Energy (left), is talking with Lee Yong-ho, secretary of the Political, Judicial and Administrative Affairs Subcommittee. 2022.4.11 [Photo by the Transition Committee Press Corps]
photo@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Jun-hyung] The confirmation hearing for Lee Chang-yang, the nominee for Minister of Trade, Industry and Energy, is just two days away. The abolition of the Moon Jae-in administration's nuclear phase-out policy and the cost-based electricity pricing principle are expected to be major issues in the next government's key industrial policies. Concerns about a potential 'conflict of interest' due to Lee's experience as an outside director are also likely to be raised.

According to related ministries on the 7th, the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee will hold Lee's confirmation hearing on the 9th. Lee was nominated as the first Minister of Trade, Industry and Energy under the Yoon Suk-yeol administration on the 10th of last month. Having passed the 29th Administrative Examination in 1985 as the top candidate, Lee began his public service career and is regarded as an expert who has experience in the Ministry of Trade, Industry and Energy as well as academia and industry. It is reported that there is considerable expectation for Lee within the ministry as well.

"Reevaluating the Role of Nuclear Power"

The new government's official policy to scrap the 'nuclear phase-out' is likely to be the biggest issue at Lee's confirmation hearing. The abolition of the nuclear phase-out policy is considered a symbolic industrial policy of the Yoon Suk-yeol administration. The transition committee recently announced a national agenda to actively utilize nuclear power as a means of energy security and carbon neutrality. The committee included the continued operation of nuclear power plants and the resumption of construction of Shin Hanul Units 3 and 4 as part of the national agenda to use nuclear power as a baseload power source.

Lee also emphasized the importance of nuclear power. In his written response submitted to the National Assembly's Industry Committee, Lee stated, "As the energy environment changes due to energy supply chain instability and carbon neutrality, the role of nuclear power is being reevaluated."

Lee expressed the view that the resumption of construction of Shin Hanul Units 3 and 4 is necessary. He said, "Since the sites for Shin Hanul Units 3 and 4 have already been secured and the power generation business permits are still valid, resuming construction is desirable."

'Cost-Based Electricity Pricing' Policy

As the new government has established a 'cost-based electricity pricing' policy, issues related to Korea Electric Power Corporation's (KEPCO) deficits are also expected to be major points of contention. The transition committee officially announced the 'cost-based' policy at the end of last month, which involves adjusting electricity rates in line with the power purchase prices paid by KEPCO to power producers. This decision was made based on the judgment that electricity rates had been politically influenced and did not properly reflect generation costs.

Lee also hinted at the possibility of electricity rate increases. He said, "In principle, it is desirable for electricity rates to reflect market principles," adding, "We plan to reasonably review the rates in consideration of international fuel price trends, KEPCO's financial conditions, inflation, and the overall national economy."

However, he drew a clear line regarding the possibility of KEPCO privatization. Earlier, when the transition committee expressed intentions to reform KEPCO's monopoly on electricity sales, there were analyses suggesting that KEPCO might be privatized. Lee stated, "Gradually opening KEPCO's monopoly sales structure means increasing accessibility to the electricity market so that various electricity service providers can enter," and emphasized, "It does not mean privatizing the electricity market."

Support for Maintaining Trade Functions within the Ministry

Regarding the controversial 'transfer of trade functions' since the early days of the transition committee, Lee supported maintaining trade functions within the Ministry of Trade, Industry and Energy. He said, "Efforts by countries to reorganize global supply chains around their own nations are accelerating, and competition in advanced technologies is intensifying, causing rapid changes in the trade environment," adding, "The linkage between trade and the real economy sectors such as industry, technology, and energy has become more important than ever." This is interpreted as a de facto opposition to the plan to transfer the ministry's trade functions to the Ministry of Foreign Affairs.

Lee's experience as an outside director is also expected to come under scrutiny. From 2009, Lee served as an outside director for 13 years at major domestic companies such as SK Hynix and LG Display, as well as the Japanese-affiliated company TCK, receiving nearly 800 million KRW in compensation. He also worked as an advisory member at LG Management Development Institute and private equity firms, reportedly receiving 5 million KRW per month per company. This has raised concerns about potential conflicts of interest.

In response, Lee stated, "The roles of minister and outside director are separate domains." He said, "I consider the minister's public role to be different from that of an outside director," and added, "If given the opportunity in the future, I will comprehensively listen to the voices of various stakeholders in industry, academia, and research, and formulate policies at the industrial ecosystem level rather than at the individual company level."

This content was produced with the assistance of AI translation services.