The electric power market in Japan has been progressively liberalized to ensure competitive neutrality on the basis of a stable power supply by the existing ten General Electricity companies which consistently handle all functions from power generation to distribution.
In 1995, a law was revised to enable IPPs to participate in the electricity wholesale market in addition to the conventional Wholesale Electricity Utilities. Then, in March 2000, use of the transmission/distribution network owned by the electric power companies was liberalized, and the retail market was partially liberalized to allow power producers and suppliers (PPSs) to sell electricity to extra-high voltage users requiring more than 2MW. The scope of liberalization was then expanded in April 2004 to users requiring more than 500kW, and subsequently in April 2005 to users requiring more than 50kW. Thus, by 2011, the scope of liberalization covers approximately 60% of total electricity demand in Japan. Electric power companies have responded to this trend of liberalization by increasing their business efficiency while lowering electricity prices and offering a variety of pricing plans.
The New Electricity Supply SystemTo maintain fair and transparent use of the electric power transmission and distribution system, the Electric Power System Council of Japan (ESCJ) was established as the sole private organization to make rules and supervise operations from a neutral position, starting full-scale operation on April 1, 2005. In addition, Japan Electric Power Exchange (JEPX) was established in November 2003, with investments by the electric power companies, PPSs, self-generators, etc., and started business on April 1, 2005.
With the three goals of ensuring supply stability, suppressing electricity rates to the maximum extent possible and expanding the options for consumers and the business opportunities for operators, the government is planning to advance the reforms in three phases thruogh the three key measures of enchancing nationwide grid operation, full deregulation of the electricity retail and generation sectors, and further ensuring neutrality in the transmission / distribution inspecting each phase to solve any issues and taking necessary measures based on the results of the inspections.
*In Okinawa, the scope of market liberalization is different.
