Japan deregulation: Energy suppliers want slice of gas retail market

President of Kansai Electric Power Makoto Yagi told The Nikkei that: “We will enter the business with competitive pricing”, when Japan’s gas retail market is liberalised in April 2017, indicating that the company may offer cheaper prices than competitor Osaka Gas for heavy users.

Kansai Electric, like other major power providers in Japan, imports large amounts of gas to run its fossil-fuel plants.

It will reportedly use this procurement capacity to secure supplies for retail sale cost-effectively by working with international energy supplier such as BP Group of Britain and France’s Engie – formerly known as GDF Suez.

Kansai Electric imported 9.44 million tons of liquefied natural gas in fiscal 2014, more than the 8.07 million tons imported by Osaka Gas, according to The Nikkei report.

In the face of increased competition, Osaka Gas has said it will start offering gas-power bundle deals then, hoping to fence in customers by offering discounts on two-year contracts before Kansai Electric starts selling gas.

Japan deregulation – Tokyo retail market

Meanwhile, in the Tokyo area, utility Tokyo Electric Power (TEPCO) is also preparing to retail residential gas as part of its strategy to retain market share.

Speaking on Japan’s deregulation of the electricity sector taking place in from April this year, TEPCO President Naomi Hirose told The Japan News earlier this month that “the number of our customers will decline when the market is liberalised.

“We want to make up for this, even a little, by looking outside the Kanto region. In April 2017, we will enter the gas retail market for households, which is being opened up. We are considering working with some gas companies.”

Within electricity retailing, Mr Hirose said there will be “fierce competition to lock in customers who use large amounts of electricity”.

“If our rivals reduce their prices after we announce our rates, we will need to think of ways to counter this.”

Hirose said: “Our current strengths are that we hold a 100% market share of electricity for households and have 27 million customers. I want us to remain a company that customers continue to select.

“By having our business partners who enter the power retail business shoulder some of the price reduction, it will be possible to provide new discount options on power bills even for customers who do not use a large volume of electricity.