Energy company overcoming growth limits overseas
The Korea Electric Power Corporation (KEPCO) has conducted an organizational reform and established an inside competition system to bolster international competitiveness.
Han Joon-ho, chairman and CEO of KEPCO, said that the state-run corporation carried out an organizational reform on September 25 by converting eight branches with more than 1 million customers into nine independent business departments.
KEPCO also reorganized the present 1,854 departments or sections into 748 teams as part of its efforts for managerial reform.
'We changed the business disposal system of KEPCO from the previous balance-centered one to the customeroriented one. Along with this, KEPCO transferred many rights of the headquarters to business units and established a selfregulating managerial system, which pursues a result appraisal system based on an independent accounting system,' said Han.
As for the conversion to an independent business department system, Han said: 'The electric power business needs to change its basic paradigm owing to strengthened environmental protection in the wake of the effectuation of the Kyoto Protocol and tough pressure on market opening from free trade agreements (FTAs). Accordingly, we should actively accommodate such changes and exert best efforts to achieve another takeoff.' The implementation of the independent business department system is the biggest autonomous change since the establishment of KEPCO. Under the new system, independent business departments possess autonomous operating rights and responsibilities, while strengthening an independent accounting system and a result appraisal system.
'With the introduction of the new system, business departments will stage competition for managerial reform, cost reduction and bolstering of customer satisfaction. It will also bring about expansion of customers' selection rights and creation of high value added services,' the KEPCO chairman said.
In keeping with the introduction of the independent business department system, all KEPCO executives and employees were resolved to achieve another take-off through managerial reform in a ceremony held on September 26 to launch the system.
They also decided to actively accommodate changes of structural paradigm and change their consciousness and act to upgrade all parts of KEPCO to the world's top level.
At the ceremony all executives, employees and union members of KEPCO determined that they would do all they could to attain the KEPCO's future vision of becoming the world's top-level comprehensive energy company.
Key purposes of the introduction of the independent business department system are to build an inside competition system, propel managerial reform and establish an autonomous managerial system, Han said. 'The core of the operation of the independent business department system is to create a foundation for inside competition by allowing each business department to implement an independent accounting system. Based on this, KEPCO will conduct thorough result appraisals and enhance managerial efficiency through responsible management,' he said.
'To build a self-regulating managerial system of business departments, we already transferred many rights of the headquarters to business departments and will continue push ahead with this righttransferring project,' said the KEPCO chairman.
Meanwhile, the accounting system of business departments will be converted from the present cost-centered one to a profit-oriented one. Each business department will also be required to work out financial statements suitable for measuring managerial results.
Under the result appraisal system, profitability and public service will be appraised in a balanced manner to measure competition effects between business departments and encourage fair competition among them. It will be operated as an incentive system that links reward and responsibility according to achievements of each business department. KEPCO will also make a strong push for managerial reform and a cost reduction drive to increase profitability, including revenues from sales of electricity, which account for about 98 percent of the company's total income.
At the same time, KEPCO will actively participate in competition with the private sector to create more value in keeping with increased competition in the overall electric power industry.
Along with the introduction of the independent business department system, KEPCO conducted a sweeping organizational reform, under which it reduced 1,854 departments and sections to 748.
The nine business departments consist of two offices -- the strategic management office and business office -- and eight teams, including administration assistance, business assistance, technology assistance, IT assistance, customer assistance, far management and power supply teams.
In the coming two years, KEPCO plans to operate the dualistic system comprising an independent business department system and the current branch system. After analysis of business achievements, KEPCO plans to map out a more effective management system, including expansion of business departments.
'With the introduction of the independent business department system, KEPCO has reformed overall organization and business process and prepared a foundation for persistently pursuing managerial reforms, including enhancement of managerial efficiency and improvement of service to customers,' he said.
In the meantime, KEPCO Chairman Han received an appreciation plaque from Philippine President Arroyo in Cebu, the Philippines on October 12 in recognition of his great contribution to the development of the country's electric power industry.
KEPCO participated in the Philippine government's telephone project for agricultural and fishery regions as the number two private power generation provider and completed the supply of electricity to 260 regions, greatly contributing to the development of the Philippine power industry.
Ahead of this, Chairman Han delivered US$500,000 in donation to a foundation pushing for establishment of a Korean school in Manila, the Philippines on October 11.
In a separate development, KEPCO held an opening ceremony for an exhibition titled 'Edison and Electricity Life' at the KEPCO Art Center in Yangjae-dong, Seoul on October 25. On the occasion of its receipt of the 2006 Edison Grand Prize -- called the Nobel Prize in the electric power industry -- from the US Edison Association, KEPCO organized the exhibition to give children a desire to learn about science, and adults with a chance to reminisce on the electricity culture of the past. About 140 works invented by Thomas Alva Edison, including the world's first carbon filament electric bulb and a phonograph, were displayed at the exhibition.
In addition, 230 old radios, recorders, phonographs and other sound instruments and 80 old TVs, videos, film projectors and other materials were exhibited at the event.
Along with the Edison exhibition, KEPCO opened an Environment-friendly Energy Exhibition Hall simultaneously to offer children good chances to learn about the environment. In August 2001, KEPCO also opened an Electricity Museum to help children learn about the usefulness of electricity and the role of KEPCO.
The Environment-friendly Energy Exhibition Hall consists of a green globe hall featuring various environmental changes, a green village of the future where a number of small animals are living, a game searching for alternative energy, and a corner where one can experiencing energy saving and the dream of atomic energy power.
KEPCO has stably supplied electric power over the past four decades as a driving force of national economic development, enabling sustained growth through constant management innovation and technological development.
It is also enjoying recognition worldwide in terms of not only electric quality such as voltage frequency and blackout time per customer but also electricity prices.
KEPCO has been ranked first in the customer satisfaction surveys among government-owned companies for six consecutive years. It also reaped considerable business success in countries including the Philippines, thus securing a firm foothold for overseas success and overcoming the growth limits of the electric power business.
