Japanese Electricity Market

1
Japanese Electricity Market

• M. Hossein Javidi
• Iran Electricity Market Regulatory Organization
  Administrative Department for Electricity Market
  Regulatory Board

http//www.iesrd.org
2

• ?? ???? ???? ?? ??? 1925 ? ??? ?? ??? ????? ???
  ????? 738 ???? ??? ???? ????. ?? ??? 1939 ???????
  ????? ? ?????? ?? ???????? ????? ?? ?? ????? ??
  ???? ????? ????? ? ?????? ??? ????
• ( Japan Electrical Generation and Transmission
  Co.)
• ???? ???? ? ????? ????? ??? ???? ???????
  ????????? ????? ??? ???? ? ?? (9) ???? ????? ???
  ???? ???????.

3

• ??? ?? ????? ??? ????? ??? ? ?? ??? 1951? ???? ??
  9 ????? (????" ?? 10 ????? ?????? ????) ????? ??
  ? ?? ????? ????? ??? ???? ?????? ?????? ? ?????
  ?? ?? ????? ????? ????? ?? ???? ??????? ?????
  ???? ???? ?????? ???? ????. ?? ????? ????? ??? 10
  ???? ?????? ???? ?????? ??? ? ????? ???? ????
  ???? ????? ??? ???? ?? ????? ?? ????.

4
In Japan there are 10 private electric utilities,
all vertically-integrated (from generation to
retail supply). They are all regional monopolies,
with their own franchise areas. Between
generators, inter utility trade is carried out to
ensure security of supply.
5
There are three wholesale suppliers of power

• The Electric Power Development Co Ltd(EPDC)
• The Japan Atomic Power Company (JAPC)
• The Joint-Venture Power Utilities.

6
(No Transcript)
7
DEMAND

• Japanese electricity demand has shown a steady
  increase from 1965 to 1998, with a 5.3 percent
  average annual growth (EDMC/IEEJ 2000).

8
(No Transcript)
9
ELECTRICITY SECTOR RESTRUCTURING

• Deregulation of the electricity sector began in
  1995. The Electricity Utilities Industry Law, the
  main legislation covering the electricity
  industry, was amended as a result of a number of
  pressures, including
• The global energy sector reform trend
• The comparatively high electricity tariffs in
  Japan
• The deteriorating load factor (due to a sharp
  increase in demand in the summer).

10
1995 Amendment to the Electric Utility Industry
Law (EUIL), April 21, 1995

• ?? ??? ????? ???? ?? ????? ???? ????? ?????
  ??????? ????? ??? ???? ???? ???? ???? ????? ?????
  ??? ????? (IPP) ?? ???? ????? ?????? ??? ?????
  ?? ??????? ??? ?????.
• ???????? ?? ??? ???? ???? ??? ?? ????? ?? ?????
  ????? ???? ????? ????? ?? ??? ?????? ??? ?? ??
  ???? ???? ?????? ?????? ?? ??? ????? ?????
  ??????.
• ????? ????? ?? ??? ???? ????? ??? ????? ????? ??
  ????? ?????? Co-generation ???? ???? ????? ???
  ?????? ????.

11
(No Transcript)
12
Outline of Regulatory Reform in Japan
13
Outline of Regulatory Reform in Japan

• Japanese Electric Utilities have been generation
  private companies for more than 50 years
• no generation privatization except for EPDC
• deregulation-utilities favor
• liberalization - new entrants favor
• market restructuring - more neutrally

14
Electricity

• 1995 Amendment to the Electric Utility Industry
  Law (EUIL), April 21, 1995.
• 1999 Amendment to the EUIL, became effective on
  March 21, 2000.

15
Gas and Oil

• 1999 Amendment to the Gas Utility Industry Law
  (GUIL), Nov 1999, increase competition between
  gas and electric utilities
• 2001 Abolishment of the Special Law for Supply
  Security of Oil, April, 2001, would brought
  complete free competition of oil market

16
1999 Amendment to the EUIL, lunched on March 21,
2000

• Partially liberalized the retail supply segment,
  permitting large-scale consumers to choose their
  own electricity supplier for
• Those with demand of more than 2 megawatts and at
  the level of 20 kilovolts or higher.

17
1999 Amendment to the EUIL, became effective on
March 21, 2000

• Made the vertically integrated power companies
  to establish separate accounting systems for
  their generation and transmission operations
• promotes competition by permitting supplying
  other region

18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
1995 AmendmentAccelerated the competition among
IPPs

• Electricity rates in 1996 were nearly 6.3 percent
  lower than the 1989 base rate.
• In 1998, the average rate paid by residential
  customers decreased by 4.5 percent over the
  previous year, while that paid by commercial and
  industrial customers declined by 5.1 percent

22
Existing electric industries accelerate to reduce
their investment and debt assets

• Feb 2001
• TEPCO announce to halt their investment on
  new plants for 3 to 5 years, and with cut their
  annual investment as below 1000 billion yen in
  2001, first time since 1979

23
Series of halt of new power plants and reduced
annual investment

• Mar 2001 Kansai Power Co. reduced annual
  investment by 10, and delayed 3 new plants, stop
  10 plants, and close 3 plants
• Mar 2001 Chubu Power Co. reduced annual
  investment by 13, and delayed and halt 5 plants
• Mar 2001 Tohoku Power Co. reduced annual
  investment by 15
• Mar 2001 Hokuriku Power Co. reduced annual
  investment by 24, and halt Takakura pumping dam
  (Hokuriku Power)

24
Series of halt of new power plants and reduced
annual investment

• Mar 2001 Shikoku Power Co. reduced annual
  investment by 20,
• Mar 2001 Kyushu Power Co. reduced annual
  investment by 8.4, and halt 2 coal coal power
  plants
• Aug 2001 Niigata pumping dam (EPDC)
• However, only nuclear exempted from generation
  suspending

25
Rapid increase of distributed generation power
supply companies in the field of regulated market

• 16 companies set up, consisting
• Independent 7
• Oil company 1
• Gas company 1
• Electric utilities 7
• Anyway, electricity market is starting to change

26
Competitive Industry
A view from
27
A View from Competitive Industry

• limited availability of and access to inputs for
  power generation, including fuel, land, and
  generating assets
• lack of access to excess generation capacity
• transmission access issues, including pricing for
  transmission service that may render retail
  supply by new market entrants uncompetitive
• limited potential access to the power pool
  operated by the vertically integrated electric
  utilities in Japan

28
A View from Competitive Industry

• lack of unbundling of the vertically integrated
  electric utilities
• lack of an independent regulator
• lack of an independent system operator
  environmental requirements (especially at the
  prefecture and municipal levels) that delay power
  plant development and result in high construction
  costs and
• local certification requirements for power
  generating equipment that are based on safety
  rather than on performance standards, and that
  differ from international norms.

29
Remaining Issues toward Sustainable Energy System

• Tax reform both reviewing existing tax and
  introducing environmental tax
• stranded cost, which might largely come from
  nuclear assets
• introducing promotion mechanism for renewable and
  distributed energy system, which would compatible
  with new electricity market
• introducing promotion mechanism for energy
  efficiency, which would compatible with new
  electricity market
• Lack of open and democratic policy process, which
  has long been dominated by the bureaucracy
  (METI)