Today, I would like to reflect on the electric power industry's first year
of operations in a deregulated environment, and then comment on recent
Nuclear Safety Network activities.
First, on our year of deregulation...
It has been a year since the Electricity Utilities Industry Law was revised,
and retail power sales were deregulated. In just a year's time, we have
seen numerous participants enter the market from a wide range of industries
at home and abroad, and an open bidding system has been implemented for
some government agency contracts. Already, there are vendors from outside
the industry supplying power to customers. We are clearly faced by the
harsh new realities of a more competitive world.
It represents the greatest sea-change the industry has experienced. But
we have responded proactively, viewing it as a challenge to "win new
customers" rather than protect an existing customer base. FEPC member
companies have introduced attractive new pricing and service menus, and
as of last October, had reduced their rates by an average of 5.42% across
the 10 companies. I believe that this is the result of accelerated efficiency
and cost-reduction efforts in the face of deregulation.
With many vendors entering the field, there has also been a movement to
make more efficient use of generating facilities. Beginning next month,
we have decided to include industry newcomers in the "financial flexibility"
system implemented for wide-area electric power company operations. Details
of the change were announced by the Central Electric Power Council at their
press conference on March 9.
Looking back over the year, I think the most shocking event was the electric
power crisis in California. As fellow power providers who recognize the
heavy responsibility of those who maintain a lifeline service for citizens
and industry, we were saddened, and felt great sympathy for customers whose
power was without warning interrupted.
It was particularly worrying that this serious crisis arose in California,
which is often cited as an example of successful deregulation. As such,
we dispatched a study team of electric power industry experts to review
and report on the situation there. Additional information is shown in Reference
Document 1.
The team's final report is currently being prepared, but I can say at this
point that it appears that a number of factors were involved in the latest
crisis.
o External factors such as flooding in northern California, and explosive
growth in demand during the IT industry boom.
o Construction of nuclear power plants and high-voltage power line infrastructure
being delayed by stringent environmental regulations and public resistance.
o Policy planning that led to over-dependence on the spot market.
Any major change entails a certain amount of pain. But in the case of electricity,
problems do not emerge a little at a time - they happen all at once, and
can greatly affect the lives of the public. Tackling the root of the problem
will not be easy, and as we review the progress of deregulation here in
Japan, I think it is important for us to keep the example of California
in mind, and consider matters very carefully.
The final report will be issued jointly with the Ministry of Economy, Trade
and Industry, which also sent a fact-finding mission to California. Details
of the announcement are currently being finalized.
A year of deregulation has passed. In the future there will be even more
new vendors, and even more open-bid contracts, as the competition increases.
Faced with this challenge, we will continue to strive for higher business
efficiency, and will work to become the customers' power provider of first
choice. But no matter how competitive the market, we will continue to address
public-interest issues such as energy security and the environment.
Which brings me to my next topic, the activities of the NSNet, details
of which are shown in Reference Document 2.
As you know, the NSNet was established in December of 1999 to raise safety
awareness throughout the industry and ensure that an accident like the
one at JCO will never happen again.
It has been almost a year since the NSNet became active last April, and
I am pleased to report that it has heightened the flow of information between
different sectors of the industry, and raised safety awareness to a level
that makes me feel our efforts have been rewarded.
Details of the NSNet peer reviews are shown in Reference Document 2. The
reviews are conducted by a panel of specialists composed of NSNet members,
who visit the facilities of each network member and discuss safety issues
with them, sharing their experiences as equals. In this way, examples of
good procedure can be propagated laterally, at a working level. In none
of the reviews conducted to date has there been a serious problem. The
level of safety awareness at nuclear facilities was confirmed to be high.
Examples of good procedure noted in the report included a program to ensure
that safety awareness permeates to suppliers and vendors, and a quick reference
guide containing a distillation of safety guidelines.
FEPC member companies have participated in the review process, and been
reviewed, several times. Each time, they have shared their experiences
in an effort to promote good procedural models.
The peer reviews will continue into 2002. During this time, the 23 NSNet
member facilities that actually handle nuclear fuel will be subject to
priority review.
In 2001, we plan to move forward with the review process and, while listening
to the opinions of those on and off the panel, work diligently to ensure
that it maintains a meaningful track record. And we will strive to ensure
that NSNet activities become an ongoing part of safety awareness management.
We believe that with day-to-day safety precautions actively implemented
by everyone who handles nuclear materials, electric power industry operators
can stand at the fore, and by their own example, promote a culture of safety
that extends throughout the nuclear power industry.