Market Competitive Intensity (MCI): South Korea

Datamonitor's MCI Index offers a robust framework for measuring the development of utility Market Competitive Intensity. The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull.

Report Highlights
MCI scores are calculated using two different methods. The first, the simple weighted average (additive) measure shows overall competitive intensity. The second, the multiplicative method, is more complex. It prevents markets with an overly wide spread of underlying raw scores from exerting undue influence over, or skewing, the final result.

Liberalisation, energy pricing issues and environmental concerns will remain key drivers of gas and power market dynamics throughout the MCI forecast period.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Introduction: Datamonitor's MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity 2
The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment 3
The MCI assessment draws on nine underlying metrics grouped into three broad clusters: market framework; supplier push; customer pull 3
The MCI Index measures the development of 20 diverse Asia Pacific gas and power markets 4
The MCI Index assesses markets in December 2007, and on July 1, 2010, in addition to driving a market switching forecast 4
Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details) 5
Two differing overall MCI scores are calculated to ensure full clarity of results 5
A simple weighted average (additive) measure shows overall competitive intensity 5
A weighted multiple (multiplicative) measure shows overall competitive intensity 5
The MCI framework has a number of applications for your organization 6
Context: The South Korean gas and power markets lag behind many other markets in the region 7
Over the forecast period South Korea's power position slips further down the rankings 7
South Korea's weak gas market competitive intensity declines further over the forecast periodl 8
Power MCI: South Korea's power market scores cover a significant range of the scoring scale 9
South Korea's electricity sector is characterized by a regulation system dependent on the government and a system operator capable of balancing the entire system demand 9
Effectiveness of regulator [2007: 4/10 2010: 5/10] 9
Effectiveness of balancing and data transfer [2007: 6/10 2010: 6/10] 10
Supplier Push factors are driven by the wholesale fragmentation metric 10
Wholesale market fragmentation [2007: 6/10 2010: 7/10] 10
Retail market fragmentation [2007: 2/10 2010: 2/10] 10
Traded market maturity [2007: 4.5/10 2010: 6/10] 10
Customer Pull metrics remain at the lower end of the scale 11
Access to market information and assistance [2007: 2/10 2010: 2/10] 11
Access to market information remains limited in South Korea. KPX and KOREC provide a degree of operational and business information to the sector, but this does little to enhance consumer awareness. 11
Consumer representation [2007: 2/10 2010: 2/10] 11
Propensity to switch [2007: 0/10 2010: 0/10] 11
Gas MCI: South Korea's gas scores remain consistently low 12
The Market Framework factors are a key element of South Korea's overall score 12
Effectiveness of regulator [2007: 2/10 2010: 2/10] 12
Ease of third party access [2007: 0/10 2010: 0/10] 13
No third party access exists as KOGAS is yet to be unbundled and privatized. The restructuring process has been delayed and no final timeline for this to proceed has been announced. Third party access is unlikely to develop in the short term. 13
Effectiveness of balancing and data transfer [2007: 5/10 2010: 6/10] 13
Supplier Push metrics remain consistently limited 13
Wholesale market fragmentation [2007: 0/10 2010: 0/10] 13
A wholesale gas market does not yet exist in South Korea and will not emerge in the medium term. 13
Customer Pull metrics remain particularly modest 13
Access to market information and assistance [2007: 1/10 2010: 1/10] 13
Consumer representation [2007: 1/10 2010: 1/10] 13
Consumer representation in the energy sector remains inherently limited in South Korea given the lack of supplier choice.; Propensity to switch [2007: 0/10 2010: 0/10] 13
Outlook: Competitive intensity will remain very modest for the foreseeable future 14
MCI Scores 15
APPENDIX 18
Definitions 18
Ask the analyst 25
LIST OF TABLES
Table 1: Market Competitive Intensity, South Korea 2007-10 15
Table 2: MCI additive, Asia Pacific 2007-10 16
Table 3: MCI multiplicative, Asia Pacific 2007-10 17
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Table 1: Market Competitive Intensity, South Korea 2007-10 15
Table 2: MCI additive, Asia Pacific 2007-10 16
Table 3: MCI multiplicative, Asia Pacific 2007-10 17
Figure 1: MCI assessment scale 3
Figure 2: MCI assessment framework 3
Figure 3: MCI market coverage 4
Figure 4: MCI scales 5
Figure 5: MCI Applications 6
Figure 6: Asia Pacific power Market Competitive Intensity, 2007-10 7
Figure 7: Asia Pacific gas Market Competitive Intensity, 2007-10 8
Figure 8: Power Market Competitive Intensity Index, South Korea 9
Figure 9: Gas Market Competitive Intensity Index, South Korea 12
Figure 10: Market Competitive Intensity, South Korea 14
Figure 11: Scale for MCI assessment, effectiveness of regulator 18
Figure 12: Scale for MCI assessment, ease of third party access 19
Figure 13: Scale for MCI assessment, effectiveness of balancing and data transfer 19
Figure 14: Scale for MCI assessment, wholesale market fragmentation 20
Figure 15: Scale for MCI assessment, retail market fragmentation 21
Figure 16: Scale for MCI assessment, traded market maturity 22
Figure 17: Scale for MCI assessment, access to market information and assistance 23
Figure 18: Scale for MCI assessment, consumer representation 24
Figure 19: Scale for MCI assessment, propensity to switch 25
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