JAPAN Law and Practice Contributed by: Yutaro Fujimoto, Yurika Masakane, Hirokazu Tanaka and Yutaro Kato, Nagashima Ohno & Tsunematsu
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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 incorporated on 1 May 1951. Each of these nine companies was granted a monop- oly over all electricity business (generation, transmis- sion, 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 integration. They are both wholesale electricity generators: • 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 supplement the generation capac- ity 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 major utilities and J-Power. Power industry liberalisation This vertical integration and the regional monopolies over the generation, transmission, distribution and retail sectors were gradually relaxed and liberalised after 1995. In the generation sector, an Independent Power Pro- ducer (IPP) scheme was introduced in 1995, which liberalised the generation and wholesale of electricity. In the retail sector, a Power Producer and Supplier (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 consumers, or purchasers of 50 kW or more (the PPS licence scheme was abolished in 2016
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