The Tokyo metropolitan government plans to introduce competitive bidding for sales of electricity it generates, a move that could benefit smaller rivals of Tokyo Electric Power Co.
Local governments have a combined power generation capacity equivalent to two to three nuclear reactors. All electricity is sold to established regional utilities such as TEPCO, which operates the stricken Fukushima No. 1 nuclear power plant.
“If bidding spreads around Japan for power generated by local governments, with Tokyo as a model, sales to new suppliers will increase, revitalizing the electricity market,” said Naoki Inose, a vice governor of Tokyo.
New power suppliers that compete with regional utilities have called on local governments to give them a chance to purchase electricity to increase sales to customers.
The Tokyo metropolitan government plans to cancel its 10-year contract with TEPCO, which runs through 2019, to introduce a bidding system in fiscal 2013. It plans to submit a bill to revise a relevant ordinance to the metropolitan assembly session that opens next month.
TEPCO, however, is bitterly opposed to the move, a spokesman for the company said.
Tokyo and TEPCO have been negotiating the introduction of a bidding system since April.
“We want to shift to a system that allows us to sell electricity to entities other than TEPCO to make the market more competitive,” Tokyo's governor, Shintaro Ishihara, said.
Electricity is expected to be sold at higher prices if a bidding system is introduced.
Tokyo has sold electricity to TEPCO since 1957. Sales in fiscal 2011 were worth 1 billion yen ($12.62 million).
Three dams in Tokyo have a combined maximum capacity of 36,500 kilowatts.
In addition to Tokyo, 24 prefectural governments, plus the city of Kanazawa, generate electricity at their own facilities.
New power suppliers started operations following industry deregulation in 2000. But none of the local governments has introduced competitive bidding.
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