Japan plans to separate power transmission and distribution divisions from regional utilities in 2014 at the earliest, as part of efforts to give consumers more choice when it comes to selecting an electricity supplier.
The industry ministry will consider two options: spinning off the transmission and distribution division as a separate company in the utility’s group or setting up an independent agency for transmission and distribution operations, sources said.
The ministry's electricity system reform committee will begin full-scale discussions on the issue May 31.
The ministry earlier decided to allow new suppliers to sell electricity to households as early as 2014 to break virtual regional monopolies of the nation’s 10 established utilities.
It plans to finalize details of the two deregulatory measures by summer and submit a bill to revise the Electric Utilities Industry Law to the ordinary Diet session next year, the sources said.
The separation is expected to make it easier for new power suppliers, such as those specializing in renewable energy, to compete on an equal footing with regional utilities.
In Japan, regional utilities not only generate electricity but also transmit and distribute it to households and companies. Accounts are separately settled within the same company.
Prospective power suppliers have complained that they are not allowed flexible use of regional utilities’ electricity networks and that high fees are charged for using their grids.
The two options to be considered by the committee have both advantages and disadvantages, officials said.
If the transmission and distribution division is spun off as a separate company within the regional utility’s group, the established utility could maintain its influence on operations and personnel appointments.
However, the new company and the regional utility would be able to work closely when building power stations and power transmission lines.
A new agency, known as the “independent system operator,” would be able to carry out power transmission and distribution operations on a neutral basis, free from the influence of regional utilities.
However, there are concerns that the electricity supply might be disrupted if power suppliers and the independent system operator fail to coordinate with one another.
The government plans to reduce dependence on nuclear energy. Experts say power generation with renewable sources will need to be increased.
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