History of Japan's Electric Power Industry

Electricity was first used in Japan on March 25, 1878 at the Institute of Technology in Toranomon, Tokyo when an arc lamp was switched on in commemoration of the opening of the Central Telegraph Office. Eight years later in 1886, Tokyo Electric Lighting commenced operations as the nation's first electric power company, and began supplying electricity to the public in the following year.

In the early days, electricity was used primarily for lighting and gradually found broader applications as a power source. By 1896, the number of electric utilities established throughout the nation reached a total of 33, and the number of electric lights with a power supply increased to 120,000.

The early 20th century marked the establishment of long-distance transmission technology. As larger power plants were introduced, generation costs fell and electric lights came into wider use throughout the country. Consequently, electricity became an indispensable power source for industry as well.

In the years that followed, the electric power industry grew in tandem with the modernization and development of Japan's industry. At the same time, the industry experienced a major restructuring that led to the dissolution of 700 electric utilities, which merged to create five major electric utilities after the First World War. During the Second World War, the electric power industry was completely state-controlled and utilities were integrated into Nihon Hatsusoden Co. (a nationwide power generating and transmitting company) and nine distribution companies.

By the end of the war in 1945, Japan's electric power facilities had been destroyed by bombing during the conflict or had deteriorated from overuse. While restructuring of the industry was being discussed, the Korean War broke out in 1950. The resulting war boom allowed utilities to recover rapidly, and as a result, nine regional private electric power companies (Hokkaido, Tohoku, Tokyo, Chubu, Hokuriku, Kansai, Chugoku, Shikoku and Kyushu) were established in 1951. This structure remains to this day, and with the return of Okinawa to Japan in 1972, Okinawa Electric Power Co. joined as a tenth member.

In March 2000, partial liberalization of power retail supply for extra-high voltage users started. The Electricity Industry Committee (an Advisory Committee for Natural Resources and Energy, a consultative body to the Minister of Economy, Trade and Industry) verified the current scheme and discussed how the electric power industry should operate in the future. In conclusion, the committee proposed the establishment of a Japanese model of liberalization, which is based on fair competition and transparency while maintaining a vertical integration of generation, transmission, and distribution in the light of a stable supply of electricity. As a result, the revised Electricity Utilities Industry Law was promulgated in June 2003 and the scope of liberalization was expanded twice, once in April 2004 and again in April 2005.