JAPAN Law and Practice Contributed by: Yutaro Fujimoto, Yurika Masakane, Hirokazu Tanaka and Yutaro Kato, Nagashima Ohno & Tsunematsu
• endeavour to maintain the voltage and frequency of the electricity in its service area at the prescribed level; • measure and record the voltage and frequency of the electricity in its service area; • submit its financial statements to METI; • submit its segmented financial statements regard- ing its transmission and distribution services to METI; • submit a report to METI concerning the occurrence of any imbalance in its transmission and distribu- tion network; • join OCCTO; • prepare and submit a supply plan to OCCTO; and • comply with the Network Codes of OCCTO. 4.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Transmission Lines and Associated Facilities See 3.4 Eminent Domain, Condemnation and Expro- priation Rights to Construct and Operate Generation Facilities . 4.5 Monopoly Rights to Provide Transmission Services Each TSO is assigned a regional service area and is granted de facto exclusivity within such service area by METI since METI does not grant two General Elec- tricity Transmission and Distribution Business licences in relation to any service area. Electricity Transmission Business licences, Specified Electricity Transmission and Distribution Business licences and Electricity Dis- tribution Business licences are exceptions to these monopoly arrangements as described in 4.2 Obtain- ing Approvals to Construct and Operate Transmis- sion Lines and Associated Facilities . 4.6 Transmission Charges and Terms of Service Pursuant to the Electricity Business Act, the terms and conditions of transmission and distribution ser- vices need to be approved by METI. The matters to be described in the terms and conditions and the meth- odology to compute the service charge rates are set out in the regulations listed below:
• executive rules of the Electricity Business Act ( den- kijigyoho shikokisoku ); • rules on the methodology to compute tariffs for transmission and distribution services ( ippan sohaiden jigyo takusokyokyuto yakkan ryokin santei kisoku ); and • rules on the methodology to balance income and loss from transmission and distribution services ( denkijigyo takusokyokyuto shushikeisan kisoku ). The terms and conditions of transmission and dis- tribution services are first proposed by the TSO and then fixed upon the approval of METI based on the advice of EGC. METI reviews the proposed terms and conditions to check if they satisfy the following requirements: • the tariff rate is computed and determined with the assumption that the operator’s actual revenue will not exceed its projected revenue approved by METI; • the terms and conditions do not significantly undermine accessibility to the transmission and distribution services; • the method of computing the tariff rate is appro- priately and clearly stated in the terms and condi- tions; • the allocation of responsibility as well as cost-shar- ing between the TSO and users of the transmis- sion and distribution network is appropriately and clearly stated in the terms and conditions; • the terms and conditions do not discriminate against any specific person; and • the terms and conditions do not hinder the public interest. Under the 2022 Amendment, in relation to determining the tariff rate, a “revenue cap” was introduced, which has been effective since 1 April 2023. Under the rev- enue cap, the TSOs are required to determine their tariff rate with the assumption that the operator’s actual rev- enue will not exceed its projected revenue approved by METI. The TSOs propose their revenue projections and business plans for the forthcoming five years based on METI’s guidelines of the goals to be achieved by the TSOs (eg, development of the transmission and distribution network, promotion of the interconnection
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