JAPAN Law and Practice Contributed by: Rintaro Hirano, Yutaro Fujimoto, Yurika Masakane and Yutaro Kato, Nagashima Ohno & Tsunematsu
• issues warnings to operators of electric- ity businesses when EGC detects improper trades through daily market surveillance; • examines and reviews the rate of transmis- sion and distribution tariffs and regulated retail tariffs set by major utilities; and • proposes regulations to promote competition or protect consumers. 1.6 Recent Changes in Law or Regulation Response to Breach of Legal Unbundling In 2023 it was discovered that some of the TSOs had allowed their affiliate retailers access to information obtained in their transmission and distribution business, including information on new entrant retailers’ customers. METI considered these information leaks a seri- ous breach, as they had a significant adverse impact on the legal unbundling rules, and it issued business improvement orders or warn- ings against some of the major utilities and their subsidiaries. METI subsequently decided to implement additional measures against TSOs, such as imposing a physical segregation on the IT systems of TSOs and their affiliate retailers, imposing a requirement for rigorous internal control systems, and instigating outside moni- toring by EGC and industry groups of TSOs. Changes to the Electricity Business Act in 2022 for the Establishment of a Resilient and Sustainable Power System In recent years, Japan has suffered a number of natural disasters that damaged the stable pow- er supply. In 2018, the Hokkaido Eastern Iburi earthquake caused the first large-scale blackout in Japan in living memory, and in 2018 and 2019, extraordinarily large and powerful typhoons hit the main island of Japan and caused wide-scale destruction of the electricity distribution infra-
structure. Faced with these incidents, on 5 June 2020, the Diet (national legislature) passed a Bill to amend the Electricity Business Act (the “2022 Amendment”). The 2022 Amendment introduced substantial changes to the Electricity Business Act in order to: • enhance co-operation among electricity com- panies in the case of emergencies; • strengthen the power grid network; and • establish a resilient power distribution sys- tem. Under the 2022 Amendment, TSOs are required both to create co-operation plans and to estab- lish reserves to cover the cost of dealing with emergencies. OCCTO has been given a mission to create and revise power grid network devel- opment plans, taking into consideration the potential generation capacity of electricity gen- eration sites as well as mid-term and long-term cross-regional network formation (ie, “push-type network formation”). All transmission and distri- bution business licence holders are required to replace their facilities in a planned and struc- tured way. Response to Severely Tight Supply-Demand Balance and Sharp Price Spike In December 2020 and January 2021, Japan experienced a severely tight balance between the supply and demand of electricity. This caused a historic price spike in the JEPX spot market (the new record of JPY251.0/kWh was set on 15 January 2021, the highest price since the JEPX foundation) and also triggered a high imbalance fee. This, in turn, caused a financial crisis for a number of retailers and some com- menced bankruptcy procedures. The government listed the following as the major reasons for that incident: a significant increase
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