Japan Electricity Monopoly Abolition

In line with what the present government decided in September, a METI panel has recommended finally getting rid of the outdated monopoly structures still remaining on the Japanese electricity market (Kyodo over Japan Times).

That’s good news as far as it goes, but obviously any plans to follow through would need to be executed after the election coming up on December 16th. The article remarks:

The Liberal Democratic Party, which is likely to return to power in the next election, has not made its stance on electricity reform clear and uncertainties remain.

Actually, the election platform of the LDP contains a long section on energy policy. And it has this to say about the point (page 55):

199 適正な電気料金体系の構築

電気料金のあり方については、事業者が発電施設の安全 確保と安定した電力供給を行うための費用を確保する一方、 国民生活や中小・零細企業等の経営に影響を与えない配慮が 両立可能となるような適正な料金体系を構築し、国民の誰も が納得できるものとします。電力卸市場への事業者の新規参入を促進し、競争的環境の中で消費者が電気料金を選択で きるようにします。

(In my translation:) Regarding the price of electricity, we will assure that utilities will be able to raise the necessary funds to achieve the security of power plants and of supply, and on the other hand that there is no undue influence on the citizens’ standard of living and the bottom line of small and medium companies, and realize a fair pricing system that everybody can support. We will support new entrants into the market and make sure that consumers are able to choose in a competetive environment between different tariffs. (Emphasis mine).

That latter statement sure looks like an endorsement of ending monopoly structures to me. Therefore, I am optimistic that this will be done even if – as expected – the LDP happens to win the next elections. It is certainly one reform that is of strategic importance. Monopolies on the electricity market are an outdated and failed policy that needs to go. Finally getting rid of them will help with speeding up the transition to renewable energy even more.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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