The electric power market in Japan is gradually being liberalized, while the existing regional ten electric power companies, as "responsible entities," continue to handle their overall operations of generation, transmission, and distribution to ensure the stable supply of electricity.
Japan has chosen to liberalize the electric power market in stages. In March 2000, the retail market was partially liberalized to allow power producers and suppliers (PPSs) to sell electricity to extra-high voltage users whose demand is approximately over 2MW. From April 2005, the scope of liberalization was expanded to all high-voltage users whose demand exceeds approximately 50kW. All customers in the regulated market continue to receive electricity supplied by each regional electric power company that is responsible for supplying electricity within its designated service area.
From April 2007, the pros and cons of total electric power liberalization were studied by the Electricity Industry Committee (an Advisory Committee for Natural Resources and Energy, a consultative body of the Ministry of Economy, Trade and Industry). In March 2008, the Committee concluded that total liberalization was unlikely to benefit customers under the present situation, and so the idea of expanding the scope of liberalization was abandoned at the time and would be subjected to future reviews after a certain period (approximately five years).
The New Electricity Supply System To ensure fair and transparent operations of electric power
transmission and distribution, the Electric Power System Council of
Japan (ESCJ) was established as a rule-maker and supervisor and started
full-scale operation on April 1, 2005. In addition, Japan Electric
Power Exchange (JEPX), which is formed by electric power companies,
PPSs and self-generators, was established in November 2003 and started
business on April 1, 2005.
* In Okinawa, the scope of market liberalization is different.
Establishment of Electric Power System Council of Japan
In February 2004, the Electric Power System Council of Japan (ESCJ) was established in order to ensure fairness and transparency in transmission and distribution segments in which electric utilities own and operate the systems. The Council started to support power transmission and distribution from April 2005, aiming to formulate basic rules on power systems as well as to implement market oversight and dispute settlement functions.
Establishment of Japan Electric Power Exchange
In November 2003, a private non-profit organization, Japan Electric Power Exchange (JEPX), was established through investments by the participants including electric power companies, new entrants (power providers and suppliers) and non-utility generators, to provide electric power in both spot and forward trading. JEPX started operation on April 1, 2005, and aims to promote competition and revitalize the distribution of electricity nationwide.
