Japan opens up electricity market to break regional monopolies


Japan’s residential electricity market has been opened up to full competition after the government passed new legislation this week, the latest move to shake up the country’s power industry in the wake of the Fukushima nuclear disaster, Reuters reports.

The reforms, which may end with the break-up of powerful regional monopolies, are central to Prime Minister Shinzo Abe’s drive to overhaul the economy, as high energy costs weigh on government finances.

Regional monopolies like Tokyo Electric Power Co and Kansai Electric Power Co supply nearly all of Japan’s electricity and current laws allow only them to supply power to residential and small business users.

The bill, which opens up the market for smaller power suppliers, was passed in the Upper House on Wednesday after receiving 211 votes in favour and 26 against, a parliamentary official said by phone. The Lower House approved the legislation last month.

A bill passed in November allows for the establishment of a national grid operating company in 2015 to allow all suppliers equal access.

The final phase requires regional monopolies to spin off transmission and distribution operations into separate entities by 2020.

The monopolies were set up in 1951 during the American occupation after World War Two and followed the U.S. model at the time, with regional utilities controlling all aspects of generation and transmission.

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Japan opens up electricity market to break regional monopolies