JAPAN Law and Practice Contributed by: Rintaro Hirano, Yutaro Fujimoto, Yurika Masakane and Yutaro Kato, Nagashima Ohno & Tsunematsu
1. Structure and Ownership of the Power Industry 1.1 Law Governing the Structure and Ownership of the Power Industry General Structure and Ownership Inception The structure of the Japanese power industry was established during the occupation period after the Second World War when nine vertically integrated companies, each covering a different geographical region in Japan, were incorporat- ed on 1 May 1951, pursuant to a directive from General Headquarters (GHQ). Each of these nine companies was granted a monopoly over all electricity business (generation, transmission, distribution and retail sectors) in their specific region. Those nine companies were: • Tokyo Electric Power Company, Inc; • Chubu Electric Power Company, Inc; • the Kansai Electric Power Company, Inc; • Tohoku Electric Power Company, Inc; • Kyushu Electric Power Company, Inc; • the Chugoku Electric Power Company, Inc; • Hokkaido Electric Power Company, Inc; • Hokuriku Electric Power Company, Inc; and • Shikoku Electric Power Company, Inc. In 1972, when Okinawa was returned to Japan by the USA, Okinawa Electric Power Company, Inc was incorporated and granted a monopoly over electricity business in Okinawa. These nine companies and Okinawa Electric Power Company, Inc are referred to as the “major utilities”. There were two exceptions to this vertical inte- gration. They are both wholesale electricity gen- erators:
• the Electric Power Development Co, Ltd (also known as “Denpatsu” or, since 2002, “J-Power”), which was incorporated in 1952 as a state-owned corporation (with 40% of its shares held by the major utilities) to supple- ment the generation capacity of the original nine companies; and • the Japan Atomic Power Company, which was incorporated in 1957 to promote the development of nuclear power plants by the This vertical integration and the regional monop- olies over the generation, transmission, distri- bution and retail sectors were gradually relaxed and liberalised after 1995. In the generation sector, an Independent Power Producer (IPP) scheme was introduced in 1995, which liberalised the generation and wholesale of electricity. major utilities and J-Power. Power industry liberalisation In the retail sector, a Power Producer and Sup- plier (PPS) licensing regime was introduced in 2000, which partially liberalised retail sales of electricity. A PPS licence holder could sell its generated electricity to large-volume consum- ers, or purchasers of 50 kW or more (the PPS licence scheme was abolished in 2016 when all electricity retailers were incorporated into a sin- gle category for regulatory purposes). In the transmission and distribution sectors, a Specified Electricity Business operator licence scheme was established in 1995 under which the holder of such licence may sell its generated electricity to consumers in a limited geographi- cal area through a transmission and distribution network that it operates and maintains on its own in such area.
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