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    Agency for Natural Resources and EnergyCabinet Decision on the Bill for the Act for Partial Revision of the Electricity Business Act and Other Related Acts

    On March 3, 2015, the Cabinet decided to approve the Bill for the Act for Partial Revision of the Electricity Business Act and Other Related Acts, and the bill will be submitted to the 189th ordinary session of the Diet.

    The bill was formulated for the partial revision of the Electricity Business Act and other related Acts, aiming to drastically reform the regulations concerning electricity, gas and heat supply businesses, which are public benefit services.

    1. Purpose of the bill

    Based on the reform program under the Amended Electricity Business Act (Act No. 74 of 2013), enacted in November 2013 as the first step for the reform, the third step of the electricity market reform will be wrapped up by 1) ensuring further neutrality in the power transmission/distribution sector through legal unbundling style, 2) abolishing regulations imposed on retail electricity tariffs, and 3) transferring the current functions of the administrative organization responsible for regulations regarding the electricity business to a new regulatory authority with independence and high-level expertise.

    Moreover, the Strategic Energy Plan (the Cabinet decision on April 11, 2014) stipulates that the Government of Japan should remove market barriers and integrally promote the reforms of the gas and heat supply markets, along with electricity market reform. Following this policy, the bill aims to create a comprehensive energy market through such integrated reform in the energy fields of electricity, gas and heat supply.

    Such integrated reform will contribute to creating dynamic innovation, including introduction of innovative technologies and the fusion of different services, leading Japan’s economic growth, as well as to enhancing the degree of freedom for users’ energy choices, suppressing energy rates to the maximum extent possible, and securing a safe and stable supply of energy, thereby aiming to enhance the benefits for consumers.

    The bill is to revise the Electricity Business Act, the Gas Business Act, the Heat Supply Business Act, the Act for Establishment of the Ministry of Economy, Trade and Industry, and other related acts, so as to integrally advance the reforms of the regulations in the energy fields of electricity, gas and heat supply. The revision will include the following measures: [i] ensuring the network neutrality of the power transmission/distribution and gas pipeline service businesses through the legal unbundling; [ii] taking the measures for abolishing the regulations concerning retail electricity and gas tariffs; [iii] introducing full retail competition in the gas retail market (i.e. full liberalization of entry to the gas retail market); [iv] securing safety and consumer protection in supplying gas; [v] streamlining the regulations for heat supply businesses as well as ensuring the heat consumers’ interests; and [vi] establishing a surveillance commission for electricity, gas and heat markets.

    2. Outline of the bill

    Major measures of the bill are as follows;

    Measures related to the Electricity Business Act

    1. Ensuring the network neutrality of the power transmission/distribution sector through the legal unbundling in April 2020
    2. Imposing code of conducts on transmission/distribution companies aiming at securing proper competition among the electricity companies in the liberalized generation and retail sectors
    3. Maintaining regulated retail tariffs as a transitional measurement until or after April 2020 (reviewing the competition situations before removing the regulation for retail tariffs)
    4. Other revised regulations
      1. Abolishing special provisions for issuing secured bonds with a statutory lien (stipulating the transitional measures)
      2. Formulating regulations for balancing the supply of electricity concerning the utilization of the demand response
      3. Introducing regular inspection of wind power generation facilities
      4. Streamlining safety regulations on welding
    5. Provisions on verification

    Measures related to the Gas Business Act

    1. Fully liberalization of entry to the gas retail market
      1. Liberalizing supplying gas to the household sectors
      2. Revising business license categories for gas supply
      3. Formulating provisions for third-party access to LNG terminals
    2. Developing gas pipeline networks
      1. Securing regional monopolies and regulated tariff for gas pipeline service businesses
      2. Formulating a mechanism for orders and rulings against negotiation on connecting pipelines among companies
    3. Ensuring consumer protection and securing safety
      1. Introducing a period of transitional arrangement for regulated retail tariffs (reviewing the competition situations before removing regulation for retail tariffs)
      2. Providing last resort services to the consumers by general gas pipeline service providers
      3. Stipulating requirements for gas retail service businesses to secure the capability of supplying gas, to explain contract conditions to consumers and other requirements
      4. Securing the safety of related facilities
    4. Ensuring the network neutrality of the gas pipeline service sector through the legal unbundling in April, 2022
    5. Imposing code of conducts on gas pipeline service companies aiming at securing proper competition among the gas companies in the liberalized retail sectors
    6. Provisions on verification

    Measures related to the Heat Supply Business Act

    1. Streamlining regulations for heat supply businesses
      1. Changing the current market entry regulation to a registration from a permission system
      2. Abolishing regulations such as tariff regulation and supply obligation
    2. Measures for consumer protection
      1. Obligating heat suppliers to take measures for ensuing consumers’ interests such as explaining contract conditions to consumers
      2. Maintaining tariff regulation as transitional measures in the areas where consumers have difficulty choosing other heat sources

    Establishing a surveillance commission for electricity, gas and heat markets

    Establishing a surveillance commission for electricity, gas and heat markets, a new regulatory authority with independence and high-level expertise that is responsible for an appropriate monitoring in the electricity, gas and heat markets as well as code of conducts

    Reference

    Release date

    March 3, 2015

    Division in charge

    • Information on the bill as a whole and the Electricity Business Act (related to business regulations)
      Electricity and Gas Market Reform Office, Policy Planning Division, Electricity and Gas Industry Department, Agency for Natural Resources and Energy (ANRE)
    • Information on the Electricity Business Act (related to safety)
      Electric Power Safety Division, Commerce, Distribution and Industrial Safety Policy Group, METI
    • Information on the Gas Business Act (related to business regulations)
      Gas Market Division, Electricity and Gas Industry Department, ANRE
    • Information on the Gas Business Act (related to safety)
      Gas Safety Office, Commerce, Distribution and Industrial Safety Policy Group, METI
    • Information on the Heat Supply Business Act
      Heat Supply Industry Office, Policy Planning Division, Electricity and Gas Industry Department, ANRE

    Related Information

    Electricity System Reform

    Ministry of Economy, Trade and Industry
    1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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