SEC, currently 80 percent owned by the government with a float of 20 percent on the Saudi stock market, manages 37,000 megawatts of power generation capacity from some 45 plants.
"SEC currently owns generation, distribution and transmission and we would like to see this unbundled.
Our requirement is by mid-2010," Abdullah al-Shehri, vice governor for regulatory affairs at Saudi Arabia's Electricity and Cogeneration Authority, told Reuters.
The government also plans to carve out two new companies for power transmission and distribution, he said.
"We want SEC to be a holding company and to own four generation companies as well as the transmission and distribution companies," Shehri said on the sidelines of a conference in the United Arab Emirates capital Abu Dhabi.
The four new generation companies, which would each have capacity of about 9,000 megawatts, could look into strategic partnerships and sell assets, he said.
"Our aim is to create competition and encourage privatisation," Shehri said, adding that demand for power in Saudi Arabia is growing at 6 percent annually.