JAPAN Law and Practice Contributed by: Rintaro Hirano, Yutaro Fujimoto, Yurika Masakane and Yutaro Kato, Nagashima Ohno & Tsunematsu
4.7 Open-Access and Non- Discriminatory Transmission
Under the 2022 Amendment, in relation to deter- mining the tariff rate, a “revenue cap” was intro- duced, which has been effective since 1 April 2023. Under the revenue cap, the TSOs are required to determine their tariff rate with the assumption that the operator’s actual revenue will not exceed its projected revenue approved by METI. The TSOs propose their revenue pro- jections and business plans for the forthcom- ing five years based on METI’s guidelines of the goals to be achieved by the TSOs (eg, devel- opment of the transmission and distribution network, promotion of the interconnection of renewable power, and improvement in custom- er satisfaction, etc). METI and EGC then review these projections and, if acceptable to METI and EGC, these projections and such projected revenues become the cap. The revenue cap is expected to incentivise the TSOs to reduce costs for transmission and distribution services and lead, ultimately, to a reduction in the total electricity price for consumers. Further, while the tariff rate was previously only charged on the demand-side (ie, retailers), from 1 April 2024, each TSO is able to charge a tar- iff on generators that use the transmission ser- vices of TSOs. This tariff charged on generators (“Generation-Side Tariff”) consists of (i) a kW tariff, where the rate is determined with refer- ence to the maximum generation capacity of the facility minus the demand capacity of the facility; and (ii) a kWh tariff, where the rate is determined with reference to the actual generated electric- ity. The Generation-Side Tariff is expected to be passed on to electricity retailers and will ulti- mately be borne by consumers. Through this system, transmission costs are borne equally by consumers whether or not such consumers are located in the generation area.
Pursuant to the Electricity Business Act, TSOs are obliged to provide access to their transmis- sion and distribution network on a non-discrim- inatory basis. 5. Distribution 5.1 Constructing and Operating Electricity Distribution Facilities See 4.1 Constructing and Operating Transmis- sion Lines and Associated Facilities . 5.2 Regulatory Process for Obtaining Approvals to Construct and Operate Electricity Distribution Facilities See 4.2 Obtaining Approvals to Construct and Operate Transmission Lines and Associated Facilities . 5.3 Terms and Conditions Imposed in Approvals to Construct and Operate Electric Distribution Facilities See 4.3 Terms and Conditions Imposed on Approvals to Construct and Operate a Trans- mission Line and Associated Facilities . Note, however, that DSOs are not obliged to provide last-resort services and electricity retail services on isolated islands within their respective service areas. 5.4 Eminent Domain, Condemnation or Expropriation Rights to Construct and Operate Electricity Distribution Facilities See 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities .
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