Since the Great East Japan Earthquake followed by the nuclear accident, many limits of the existing electricity system have been revealed. In this situation, for an inexpensive and a stable supply, the Government of Japan is addressing the Outline for revising completely the existing system on the premises of a vertical integrated structure, a regional monopoly and tariff regulation adopting fully distributing cost methods.
Based on the Expert Committee Report, the Cabinet decided to approve the Policy on Outline on April 2, 2013.
The policy includes three objectives as follows:
- Securing a stable supply of electricity
- Suppressing electricity rates to the maximum extent possible
- Expanding choices for consumers and business opportunities
To achieve these objectives, bold reform will be steadily carried out according to a realistic step by step schedule, focusing on the following the three items.
- Cross-regional coordination of transmission operators
- Full retail competition
- Unbundling the transmission/distribution sector
1st stage: Establishment of the Organization for Cross-regional Coordination of Transmission Operators (OCCTO)
The OCCTO will be established in April 2015. The Amended Electricity Business Act for the 1st stage was enacted in 2013.
2nd stage: Full retail competition
The framework for full retail competition is planned to be enforced in April 2016. The Amended Electricity Business Act for the 2nd stage was enacted in 2014.
3rd stage: Further securing of neutrality of the transmission/distribution sector (legal unbundling) and full liberalization of retail electricity rates
The frameworks concerning further securing of neutrality of transmission/ distribution sector (legal unbundling) and full liberalization of retail electricity rates will be implemented in April 2020. The Bill for the 3rd stage was decided by the Cabinet and submitted to the ordinary Diet session in 2015.
Division in Charge
Electricity and Gas Market Reform Office, Electricity and Gas Industry Department, Agency for Natural Resources and Energy