[Exclusive] KEPCO Considers 'Regional Office Integration' to Improve Financial Structure

Korea Electric Power Corporation (KEPCO) is confirmed to be considering a plan to consolidate some regional offices as part of its intensive financial structure improvement efforts.

According to a comprehensive report by Asia Economy on the 4th, KEPCO recently discussed whether to include a plan to consolidate some of the approximately 230 regional offices in its final financial structure improvement plan as part of its mid- to long-term strategy. This additional measure comes in response to the government and ruling party's demand for KEPCO to prepare stringent self-help measures ahead of the electricity rate hike in the second quarter.

As of the end of last year, KEPCO operates 18 headquarters and 234 regional offices nationwide. Compared to 10 years ago, there has been an increase of one headquarters and 11 regional offices. Fifteen regional headquarters oversee the respective offices and are responsible for the local power transmission and distribution sales networks, while three construction headquarters handle the establishment of transmission and transformation power networks. Regional offices are categorized and operated as 'branches' (183), which manage distribution networks and sales under the regional headquarters, 'power branches' (45), which manage transmission networks, and 'construction branches' (6), which build power networks.

The reason KEPCO is considering adjusting regional offices is that unifying some offices arranged at the county (gun) level could reduce operating costs and allow for personnel reallocation. While the previous two financial soundness plans focused on selling idle assets, the additional measures recognize that workforce and organizational restructuring, including consolidation of similar overlapping tasks and improvement of inefficiencies, are inevitable.

This aligns with the 'painful structural reform efforts' emphasized by Park Dae-chul, the Policy Committee Chairman of the People Power Party, regarding energy public enterprises. Regional offices have a workforce ranging from 30 to 100 people depending on the water supply. Reallocating up to about 100 personnel from these offices is expected to improve work efficiency as well as enhance the effects of asset sales.

However, it is uncertain whether KEPCO will ultimately include such a plan in its financial structure improvement proposal. Decisions at the level of organizational restructuring, such as office relocations, significantly impact the local economy, making implementation difficult without local consensus. A representative case is the suspension of the consolidation of Jinju and Uiryeong branches that KEPCO pursued in 2021. At that time, KEPCO attempted to consolidate the Uiryeong and Jinju branches as part of efforts to enhance workforce efficiency through the regionalization of power projects, but the plan was scrapped due to opposition from residents of Uiryeong. The reason was that the consolidation would reduce two organizations with 29 personnel to one organization with 15 personnel.

KEPCO has mostly completed the draft of the final financial structure improvement plan and plans to report it to the government as early as next week. Once the government assesses the appropriateness of the improvement plan and approves it, it is expected to announce the electricity rate hike plan for the second quarter. A KEPCO official stated, "The plan to consolidate some regional offices is being considered as part of the mid- to long-term financial structure improvement plan. We are discussing it with all alternatives open, including feasibility, and the final decision will be known only after the final plan is released."

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