Electricity liberalisation: Japan’s new retailers eye US$65bn market

Japan electricity liberalisation
Japan’s electricity liberalisation is running to timetable as new retailers will begin registering to sell power from April 2016 when the market is opened up to competition

In East Asia, Japan has taken a further step towards the liberalisation of its electricity system with the opening of a registration system to give market entry to retail start-ups.

New electricity retailers will be able to register with Japan’s Economy, Trade and Industry Ministry from Monday, reports The Japan News.

The newspaper reports that in the run up to April 2016 when restrictions on which companies can sell electricity are lifted, retailers will be compiling rate and service plans while the ministry will compile rules on consumer protection.

Under the government electricity liberalisation plan – part of a programme working towards a smart grid in Japan – ordinary households will no longer be bound to major utilities that provide services in their local areas under the current regional monopoly system, but instead will be able to chose retailers and rate plans.

Japan’s new electricity retailers

Gas companies and oil wholesalers are among new entrants to the market estimated to be worth ¥8.1 trillion (US$65 billion).

Start-ups will have a 10 percent share in the electricity retail market for households and stores, according to a forecast by marketing research firm Fuji Keizai Management Company.

They will likely engage in competitive sales promotions, particularly in the Tokyo metropolitan area.

Meanwhile, an expert panel at the industry ministry will announce proposals for rules to protect consumers from aggressive sales promotions, before officially compiling the rules in autumn or later, states The Japan News.

The electricity liberlisation rules will likely stipulate that retailers should make clear to consumers how bills will be calculated, and how they can terminate their contracts. Violators would be barred from providing services even after the market is liberalized in April.

The rules are aimed at preventing retailers from winning contracts using plans with rates that appear cheaper than it is possible to provide, or creating complicated procedures for contract cancellation.

Electricity liberalisation – utilities respond

In response to the opening of the market, major utilities such as Tokyo Electric Power Company (Tepco) are looking to bundle electricity with other services.

Tepco is in talks with SoftBank and Tokai Holdings – a city gas supplier for the Tokai region – to offer a discount plan for customers spanning electricity, mobile phone and gas services.

Other major utilities KEPCO and Chubu Electric Power Comany are also considering tie-ups with communications providers.