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News Navigator: How does the liberalized electricity market work?


The Mainichi answers common questions readers may have about liberalization of the electricity market in Japan.

    Question: Starting April, consumers choose which power companies to get their electricity from, right?

    Answer: Until April, consumers had to buy electricity from a large power company that had a regional monopoly in their area. Beginning this month, however, electricity can be purchased from a wide range of suppliers including gas and oil companies as well as telecommunications firms.

    Q: If we sign up with a new power company, do we have to get new power lines installed?

    A: No. The power lines that connect homes with power plants are still owned and managed by the major utilities. The new suppliers provide electricity from their own generating stations or other sources, and then pay the large electric companies a fee to use the power lines for distribution. Since there is a risk that the big electric companies will treat their new competition unfairly, ownership of the power lines will be taken away from the big utilities in April 2020 and given to new, separate power transmission companies.

    Q: Is there anything else that we have to get installed if we switch to a new power company?

    A: To sign up with a new supplier, any household with an old electricity meter will have to replace it with a new "smart meter" with telecommunications functions. These meters don't need to be checked manually. Rather, they track how much electricity is used, and send the information to the supplier. Getting a smart meter installed is usually free.

    Q: Do we need to be concerned about whether new power companies will be able to supply electricity on a stable basis?

    A: Power from the big utilities and from the new suppliers is blended together, eliminating any difference in "quality." So there's no reason to worry about a stable supply. Think of the electricity supply as a pool filled up from many different spouts. It's all the same water once it's in the pool. Even if a power plant run by one of the new suppliers shuts down unexpectedly, the big utility in your area will make up the shortfall. If a new supplier goes out of business or just gets out of the electricity market, however, its customers will have to sign a contract with a different company.

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