In this paper, we suggest the operation, market structure, and regulation strategies with distributed generation (DG), demand response (DR), smart grid (SM) in the Korean power distribution system. The strategic business unit (SBU) in the Korea Electric Power Corporation (KEPCO) was introduced as an alternative strategy because of the interruptions in the steps of distribution separation in the power generation sector. The SBU is a system which retains responsibility for its own costs through self-regulation by each unit, thus providing incentives for competition, innovation and learning. In the regulatory perspective data envelopment analysis (DEA), the retail price index (RPI-X) regulation algorithm can be used to evaluate the relative efficiency of each unit in incentive based regulation. A distributed distribution power flow analysis can be performed for the calculation of the boundary values of each SBU's information. In this paper, we will consider diverse strategies involving DG, SM, DR, and market regulation strategies in the South Korean power system.