The Korean government recently announced proposed legislations that may impact the power supply and construction of data centers. This article addresses (i) the proposed amendments to the Enforcement Decree of the Electric Utility Act (“EUA”) announced by the Ministry of Trade, Industry and Energy of Korea (“MOTIE”), and (ii) proposed amendments to the Telecommunications Business Act (“TBA”) proposed by National Assembly Member Sang-Hyuk Park.
1. Proposed Amendments to the Enforcement Decree of the EUA
On December 26, 2022, the MOTIE issued a legislative notice on the proposed amendments to the Enforcement Decree of the EUA. If passed, the proposed amendments will provide grounds for suspension of supply of electricity to certain businesses that use a large amount of electricity, such as data center operators, if deemed that it is difficult to maintain the reliability of the electric power system and quality of electricity due to an entity using a large amount of electricity.
Specifically, the EUA currently provides that entities with obligation to provide electricity such as electricity generation business entities and electricity sales business entities may suspend the supply of electricity if there is justifiable ground pursuant to Article 5-5 (9) of the Enforcement Decree of the EUA. The proposed amendments adds “difficulty to maintain the reliability of the electric power system and quality of electricity due to an entity intending to use a large amount of electricity under Subparagraph 5” as one of justifiable ground.
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Article 5-5 (Justification for Refusal to Supply Electricity) 5. Where an entity intending to use a large amount of electricity fails to request an electricity sales business entity, in advance, by the time specified in any of the following, to supply electricity: (a) If the estimated consumption is at least 5,000 kilowatts and less than 10,000 kilowatts: By not later than one year before the scheduled date of consumption. |
Article 5-5 (Justification for Refusal to Supply Electricity) 5. <Omitted> |
While the language “an entity intending to use a large amount of electricity” may be broadly applicable to other types of businesses, we understand that the proposed amendments were drafted with the intent to target data centers. In particular, the MOTIE previously announced in November 2022 that it is considering amendment of the EUA Enforcement Decree to spread the data centers to outside of the Seoul Metropolitan Area, which already consumes massive amount of energy. Consistently, the proposed amendments explain that an expected effect of amendments would be “prevention of deterioration of electricity quality and system congestion by reducing the concentration of data centers in the Seoul Metropolitan Area.”
2. Proposed Amendments to the TBA
On January 20, 2023, twelve National Assembly Members, with Sang-Hyuk Park as the representative, introduced the proposed amendments to the TBA that will require obtaining nearby inhabitants’ opinions when constructing a large-scale data center.
Specifically, the proposed amendments will apply to telecommunications business operators intending to build data center larger than the size prescribed by the Ordinance of the Ministry of Science and ICT, and will require such operators to obtain opinions from the nearby neighbors of residential and commercial areas who are affected by the building of the data center.
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Article 62-2 (Obtaining Residents’ Opinions when Building Large Data Center) ① Where a telecommunications business operator intends to build a data center larger than the size prescribed by the Ordinance of the Ministry of Science and ICT, it shall obtain opinions of residents residing in the residential areas and commercial areas (referring to residential areas and commercial areas under Article 36 (1) 1 (a) and (b) of the National Land Planning and Utilization Act) that would be affected by the building of the data center; provided, however, that this shall not apply where the residents’ opinions have already been obtained pursuant to other laws and regulations. |
The legislative intent of the proposed amendments is to (i) seek an institutional solution to address conflicts between data center operators and nearby residents regarding the harmfulness of electromagnetic waves of the accompanying high-voltage transmission lines installed for power supply, as data centers are becoming larger in size, and (ii) prepare procedures to resolve social disputes in advance by obtaining opinions from the residents of neighboring residential and commercial areas that are affected by the building of the data center.
Along with other regulations resulting from the recent data center fire (such as the expanded scope of disaster management obligations), the proposed amendments to the Enforcement Decree of the EUA and the proposed amendments to the TBA discussed are also expected to directly impact the existing and new data center operators. In particular, there may be complex interactions between the interests of various stakeholders in relation to the large scale use of electricity, and we will continue to monitor and provide updates on legislative activities and policy developments that can affect the operation and utilization of data centers.
