Cabinet Decision on the Bill for the Act of Partial Revision of the Electricity Business Act and Other Acts for Establishing Resilient and Sustainable Electricity Supply Systems
February 25, 2020
On February 25, 2020, a cabinet decision was made on the Bill for the Act of Partial Revision of the Electricity Business Act and Other Acts for Establishing Resilient and Sustainable Electricity Supply Systems. The bill will be submitted to the 201st ordinary session of the Diet.
1. Background to the revision of the Acts
Japan has been facing environmental changes surrounding electricity supply as seen in higher frequencies of natural disasters, heightening tensions in the world energy situation especially in the Middle East, and expansion of renewable energy. In light of these, the Ministry of Economy, Trade and Industry (METI) considers it important for businesses to secure sustainable electricity supply systems by measures for: quickly recovering such systems in case of disasters, smoothly investing in electricity transmission/distribution grids, encouraging businesses to further introduce renewable energy and other purposes.
Against this backdrop, aiming to establish resilient and sustainable electricity supply systems, the revised Acts are to take the following measures, including those for: requiring electricity transmission/distribution businesses to formulate action plans on their collaboration in disaster responses, establishing a new scheme for supporting businesses in introducing renewable energy, and adding new functions to those provided by the Japan Oil, Gas and Metals National Corporation (JOGMEC).
2. Outline of the bill
(1) Partial revision of the Electricity Business Act
[i] Enhancing inter-business collaboration in disaster responses
The revised Act is to require electricity transmission/distribution businesses to jointly formulate action plans on their collaboration in disaster responses describing actions that they collaboratively take so that they are able to quickly and efficiently respond to disasters.
It is to take measures for requiring such businesses to provide information, at the request of the METI Minister, to municipalities and other related entities on the household/consumer-based situations of whether or not electricity is appropriately distributed to such consumers in disaster response.
[ii] Enhancing resilience of electricity transmission/distribution grids
From the viewpoint of enhancing electricity resilience, the revised Act is to add, to the services provided by the Organization for Cross-regional Coordination of Transmission Operators, new services to formulate plans on push-based approaches to developing networks (“Plan on Development of Cross-Regional Grids”), and it is also to require electricity transmission/distribution businesses to achieve efforts for systematic renewal of the existing facilities.
Aiming to achieve electricity transmission/distribution grids with further enhanced resilience, the revised Act is to inaugurate a charging system for wheeling services in which the METI Minister should regularly approve the upper threshold of business incomes based on the investment plans and other documents submitted by businesses and the Minister should encourage the businesses to introduce more efficient costs within the threshold.
[iii] Electricity distribution systems with disaster resilience
- The revised Act is to take measures for defining distribution businesses under laws so that such businesses are able to operate their services even in case of emergencies as independent networks while continuing the operation of distribution grids, including small distributed energy resources, in specific service areas.
(2) Partial revision of the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities (“Act on Renewable Energy Special Measures”)
[i] Supporting businesses in introducing a market-price-linked measure
Aiming to encourage renewable energy generators to secure their predictability for investment return and take market-conscious activities, the revised Act is to establish a Feed-in-Premium (FIP) scheme in addition to the existing FIT scheme, a new scheme in which renewable energy generators are able to receive a certain level of premium based on the market price.
[ii] Fortifying electricity grids taking advantage of the potential of renewable energy
The revised Act is to establish a system in which part of the expenditures for fortifying electricity grids necessary for expanding the introduction of renewable energy into businesses, e.g., regional interconnection lines, which regional electricity transmission/distribution businesses bear under the current Act, is to be supported based on the surcharge system across Japan.
[iii] Appropriately discarding facilities for generating renewable energy
The revised Act is to impose obligations on renewable energy generators to establish an external reserve fund for the expenditures for discarding their facilities for generating renewable energy as a measure for addressing concerns over inappropriate discarding of PV facilities.
(3) Partial revision of the Act on the Japan Oil, Gas and Metals National Corporation, Independent Administrative Agency (“JOGMEC Act”)
[i] The revised Act is to establish new JOGMEC functions in which, in case of emergencies, JOGMEC will, at the request of the METI Minister based on the provisions of the Electricity Business Act, procure LNG and other fuels for electricity generation.
[ii] Aiming to secure diverse procurement sources of LNG and stable supply of metallic minerals, the revised Act is to enable JOGMEC to gain additional functions, e.g., equity capital in transhipment or storage terminals for natural gases and in projects for mining and refining metallic minerals.
Division in Charge
- Information on the Electricity Business Act:
Policy Planning Division, Electricity and Gas Industry Department, Agency for Natural Resources and Energy
- Information on the “Act on Renewable Energy Special Measures”:
New and Renewable Energy Division, Energy Efficiency and Renewable Energy Department, Agency for Natural Resources and Energy
- Information on the “JOGMEC Act”:
Policy Planning Division, Natural Resources and Fuel Department, Agency for Natural Resources and Energy