JAPAN Law and Practice Contributed by: Yutaro Fujimoto, Yurika Masakane, Hirokazu Tanaka and Yutaro Kato, Nagashima Ohno & Tsunematsu
5.3 Terms and Conditions Imposed in Approvals to Construct and Operate Electric Distribution Facilities See 4.3 Terms and Conditions Imposed on Approv- als to Construct and Operate a Transmission 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 Expro- priation Rights to Construct and Operate Generation Facilities . 5.5 Monopoly Rights for Electricity Distribution Entities See 4.5 Monopoly Rights to Provide Transmission Services . 5.6 Electricity Distribution System Charges and Terms of Service Unlike TSOs, DSOs are not obliged to obtain the approval of METI with regard to their tariff rates and the terms and conditions of distribution services. How- ever, the Electricity Business Act requires a DSO to make a prior written notification to METI if the operator sets or changes its tariff rates or prepares or amends the terms and conditions of its distribution services. If METI considers that such tariff rates or such terms and conditions do not comply with certain requirements, METI may order the DSO to revise the tariff rates or the terms and conditions. The requirements are set out in the criteria for examinations concerning dispositions of the Minister of Economy, Trade and Industry under the Electricity Business Act ( denki jigyoho nimotozuku keizaisangyodaijin no shobun nikakaru shinsakijuntou ). See also 4.6 Transmission Charges and Terms of Service . Tariff rates and the terms and conditions of the distribution services of DSOs must be in alignment with those of TSOs in many respects. For instance, unit prices of distribution services of DSOs must be within 5% of those of TSOs on an annual average basis.
of renewable power, and improvement in customer 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 tariff on genera- tors that use the transmission services of TSOs. This tariff charged on generators (“Generation-Side Tariff”) consists of (i) a kW tariff, where the rate is determined with reference to the maximum generation capacity of the facility minus the demand capacity of the facil- ity; and (ii) a kWh tariff, where the rate is determined with reference to the actual generated electricity. The Generation-Side Tariff is expected to be passed on to electricity retailers and will ultimately 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. 4.7 Open-Access and Non-Discriminatory Transmission Pursuant to the Electricity Business Act, TSOs are obliged to provide access to their transmission and distribution network on a non-discriminatory basis. 5. Distribution 5.1 Constructing and Operating Electricity Distribution Facilities See 4.1 Constructing and Operating Transmission 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 Oper- ate Transmission Lines and Associated Facilities .
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