Announcement of Actions on Dramatic Price Surge in Wholesale Electricity Market

Against the backdrop of the tight supply and demand balance of electricity due to severe cold temperatures and unstable weather this winter, the monthly average price of electricity in the wholesale electricity markets (spot markets) in January 2021 (in terms of the amount delivered on and before January 29, 2021) was 66.91 yen per kWh, which is expected to mark a record high in the monthly average prices.

In this situation, METI requested general electricity transmission and distribution businesses to take a special measure for stipulating the upper limit of the unit price of imbalance adjustment at 200 yen per kWh in such cases as insufficient supply of electricity, and also conducted a variety of efforts, such as disclosure of market-related information and strict monitoring of electricity markets. As a result, recent prices in the wholesale electricity market remain stable.

Meanwhile, as some electricity consumers have chosen a market-price-linked electricity rate option, a dramatic price surge in the wholesale electricity market may cause a significant impact on such consumers.

In response, METI opened a consultation counter under the Electricity and Gas Market Surveillance Commission (EGC) and has been encouraging consumers to confirm the terms and conditions of their current contracts and explaining the methods for switching to new electricity retailers. Meanwhile, some electricity retailers have already started sending electricity bills for consumption in January 2021 to consumers, while impacts caused by the novel coronavirus disease still persist. In view of this situation, METI considers it important for consumers to continuously receive stable services of electricity supply even under such market circumstances and, to this end, it implemented the following measures.

METI will make a comprehensive review of this dramatic price surge in the wholesale electricity market and will consider necessary institutional responses such as ideal approaches to a stable supply and market systems of electricity.

1. Request for electricity retailers to take flexible actions to consumers

Aiming to help consumers continuously receive stable services of electricity supply even in the dramatic price surge in the wholesale electricity market, METI requested electricity retailers, in particular those providing market-price-linked electricity rate options, to take flexible measures in order to avoid dramatic changes in electricity rates charged to consumers.

2. Request for flexible responses to electricity retailers receiving wholesale electricity supply

Taking into consideration that some electricity retailers are receiving wholesale electricity supply at market-price-linked rates from other retailers, METI requested that electricity retailers providing wholesale services deal with other retailers receiving wholesale electricity supply in a flexible manner in order to avoid dramatic changes in electricity rates charged to such retailers.

3. Request for general electricity transmission/distribution businesses

Backed by the dramatic price surge in the wholesale electricity market, some businesses may fail to procure electricity in the market and face the need to pay temporary adjustment charges required in the case of insufficient electricity supply at a price higher than the conventional price level. Furthermore, this may cause a great impact on consumers.

In light of these situations, 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/distribution businesses to: take necessary procedures for accepting requests for the measures shown in the Appendix from February 15 (Mon.), 2021; open consultation counters for electricity retailers to address inquiries about the measures shown in the Appendix; and closely collaborate with the consultation counter that METI will open.

4. Request for the Japan Electric Power Exchange (JEPX)

As some electricity retailers may face difficulties in paying deposits to JEPX or in satisfying the asset requirements for market trading, METI requested JEPX to deal with such retailers in a flexible manner.

5. Opening a consultation counter at METI

On January 29, 2021, METI will open its consultation counter for electricity retailers concerning the measures above.

• Telephone number of the consultation counter for electricity retailers: 03-3501-1582

Related material:

• Appendix (in Japanese) (PDF:138KB)

Information on the consultation counter for electricity retailers:

Telephone: 03-3501-1582 (direct line); service hours: from 9:00 to 17:00
Facsimile: 03-3580-8485

Division in Charge

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