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Announcement of Actions on Price Surge in Wholesale Electricity Market

Japanese

January 15, 2021

Energy and Environment Policy

In light of the recent price surge in the wholesale electricity market, the Ministry of Economy, Trade and Industry (METI) has approved a special measure for stipulating the upper limit of the unit price, e.g., imbalance rates, of electricity at 200 yen per kWh that will apply to electricity supplied on and after January 17, 2021.

Against the backdrop of the tight supply and demand balance of electricity due to severe cold temperatures and unstable weather this winter, the highest price of electricity in recent spot markets remains over 200 yen per KWh for several consecutive days. This drives many market participants to face difficulties in procuring supply capacity at markets.

METI is scheduled to introduce a measure for stipulating the upper limit of the unit price, e.g., imbalance rates, of electricity in tight supply/demand situations at 200 yen per kWh in and after April 2021. However, from January 12 to 15, 2021, the highest trading prices were over 200 yen per kWh for four consecutive days. In light of this situation, METI considers it necessary to take urgent action to secure a stable electricity trading environment for market participants.

This event is considered to fall under the situation where “there are special circumstances that make it difficult for the general electricity transmission and distribution utility to provide the wheeling service, etc. under the general provisions for wheeling service, etc.” in the proviso to Article 18 (2) of the Electricity Business Act (Act No. 170 of 1964). Accordingly, METI requested general electricity transmission and distribution businesses to follow necessary procedures.

In response, 10 general electricity transmission/distribution companies (*) submitted a request for approval of a special measure applicable to the period from January 17 to June 30, 2021, under the provisions of 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), whereby the unit price, e.g., imbalance rates, should be set at 200 yen per kWh when the price calculated as a unit price, e.g., imbalance rates, exceeds 200 yen per kWh.

METI examined the request in accordance with the Electricity Business Act and also heard opinions of the Council for Monitoring Electricity and Gas Trading. As a result, METI considers it necessary to put the special measure in place as a matter of urgency under the current circumstances and hereby announces that it has approved the request today.

* Hokkaido Electric Network Co., Tohoku Electric Network Co., Tokyo Electric Power Grid Co., Chubu Electric Power Grid Co., Hokuriku Electric Power Transmission/Distribution Co., Kansai Electric Power Transmission/Distribution Co., Chugoku Electric Network Co., Shikoku Electric Power Transmission/Distribution Co., Kyushu Electric Power Transmission/Distribution Co., Okinawa Electric Power Co.

Division in Charge

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