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Agency for Natural Resources and Energy Partial Revision of the Ministerial Order as the Basis for Calculating Imbalance Rates

On September 26, 2017, the Ministry of Economy, Trade and Industry (METI) promulgated a Ministerial Order for the Partial Revision of the Rules for Rate Calculation Concerning the Wheeling Service Provisions for General Electricity Transmission/Distribution Businesses, based on which imbalance rates are calculated.

1. Outline

After the full liberalization of entry into the electricity retail market started in April 2016, electricity retailers are required to adjust the imbalance of electricity between the planned amount and the generated amount by 30-minute units. The differences between the demand planned by electricity retailers and the actual demand should be adjusted as imbalances between general electricity transmission and distribution utilities that have supplied the imbalance electricity in advance and electricity retailers after electricity trade.

Imbalance rates, burdens that electricity retailers should bear, are determined by the market-price-linked calculation method, specifically, under Article 27 of the Rules for Rate Calculation Concerning the Wheeling Service Provisions for General Electricity Transmission/Distribution Businesses (Ordinance of the Ministry of Economy, Trade and Industry No. 22 of 2016). The revised Ministerial Order will come into force to change the provisions for the methods of calculating imbalance rates from October 1, 2017 as below.

In addition, in line with the enforcement of the revised Ministerial Order, the promulgation of a Public Notice of the Announcement of the Unit Prices to Be Used as the Basis for Calculating Imbalance Rates (Ordinance of the Ministry of Economy, Trade and Industry No. 48) is to be abolished on October 1, 2017.

New provision: Methods for calculating imbalance rates (from October 1, 2017)

Note:
Underlined sections represent the revised provisions.
Imbalance rates = Weighted average value of spot market prices and hour-ahead market prices x α+β
α: Adjustment item corresponding to power supply/demand situation for the whole system
β: Adjustment item reflecting the differences in market prices by region

Details of the revised provisions:

  • The revised Ministerial Order is to change the range of the upper and lower limits excluded from the values for the bidding curve, based on which the value α is calculated, from 20% to 3% so as to relax the level of the measures for mitigating dramatic changes that control the variation range of the value α.
  • It is to define the value β as the mean value of the difference between the area price and the system price as for all time-units of the target month of adjustment so as to reflect the differences in market prices by region.

Previous provision: Methods for calculating imbalance rates (before September 30, 2017)

Imbalance rates = Weighted average value of spot market prices and hour-ahead market prices x α+β
α: Adjustment item corresponding to power supply/demand situation for the whole system
β: Adjustment item reflecting differences in the standards of supply/demand adjustment costs by region
β= [ⅰ] - [ⅱ]

  1. Value obtained by dividing the recent variable costs of hydropower generation and thermal power generation concerning general electricity transmission/distribution businesses (basically using data on the achievements in the second preceding fiscal year; as for the FY2017, those in FY2015) by the power generation amount by these businesses
    Note: Calculation is made excluding value relevant to the electricity provision to Japan’s remote islands and the ancillary services for the mainland.
  2. Value announced publicly by the Minister of Economy, Trade and Industry as an average value of the total values in Item [ⅰ] provided by all general electricity transmission/distribution businesses

2. Related document

3. References

Release date

September 26, 2017

Division in Charge

Electricity Industry and Market Office, Policy Planning Division, Electricity and Gas Industry Department, Agency for Natural Resources and Energy

Related website

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
Copyright Ministry of Economy, Trade and Industry. All Rights Reserved.