Japan creates electricity market watchdog for energy retailing

Japan electricity market watchdog
Japan’s new electricity market watchdog will monitor the power transmission fees charged by large power companies to new entrants to energy retailing

In East Asia, Japan’s Economy, Trade and Industry Ministry on Tuesday launched an electricity market watchdog in a move towards developing consumer-friendly energy retailing.

The five-member Electricity Market Surveillance Commission is headed by Tatsuo Hatta, president of the Asian Growth Research Institute, reports The Japan Times.

With a secretariat of around 70, the market watchdog aims to protect consumers and ensure fair competition in preparation for full liberalisation of energy retailing by April 2016.

Mr Hatta told reporters that the commission will set electricity trading rules and examine whether power retailers explain terms of contracts to consumers sufficiently before concluding deals.

Consumers will also be able to approach the commission with complaints about power retailers.

Approval of electricity retailers

Crucially, the entity will also give its opinions on whether the government should approve the registration of power retailers.

In August 2015, Japan took 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.

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% share in the electricity retail market for households and stores, according to a forecast by marketing research firm Fuji Keizai Management Company.

Retailers are now 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.

Power transmission fees

The watchdog will also check the power transmission fees that major power companies will set when they open up their transmission cables to new power market entrants.

Of the major companies, Hokuriku Electric Power Co., Chugoku Electric Power Co. and Okinawa Electric Power Co. have not recently reviewed their basic costs, which are used to set the transmission fees.