DPJ ruins chance at power reform

By engaging in blatant partisan politics and passing a censure motion against Prime Minister Shinzo Abe in the Upper House on June 26, the Democratic Party of Japan and other opposition parties killed a chance to pass six bills that were almost certain to be enacted. Among them was a bill to revise the Electric Utility Power Industry Law for reform of the nation’s power industry. This is utterly deplorable and shows that the opposition cares more about scoring political points than acting in the best interests of the people.

The bill, based on the experience of the Fukushima nuclear crisis and the closure of many nuclear power plants, was ultimately aimed at diversifying energy sources by building a large number of small-size power plants and locating them close to the communities that they serve.

The opposition parties’ shirking of its responsibility is especially grave because the nation’s major power companies and their labor unions will take advantage of the abandonment of the bill and seek to weaken or even gut it.

Under the current system, Japan’s 10 major power companies enjoy regional monopolies by controlling both power generation and power transmission and distribution. This system makes it difficult to supply electricity between different service areas in the event of emergencies. It also hampers the entry of new power-generation entities into the electricity retail market, thus keeping electricity prices high. The rigid nature of the current system has resulted in Japan lagging far behind other countries in pushing energy conservation and developing renewable energy sources nationwide.

The bill in question was designed to establish by 2015 an organization that would be empowered to instruct power companies to supply electricity to each other when needed to overcome supply shortages and to make necessary adjustments for that purpose. The bill’s supplementary provision carried a plan to enact a bill in 2014 to liberalize the sale of electricity to households and to pass another bill in 2015 to strip the major power firms of power transmission and distribution functions, which would take place between 2018 to 2020.

Although the revision bill was abandoned, the government should make efforts to accelerate the separation of the power transmission and distribution functions from the major power companies’ power generation functions.

The planned bill to push the separation has a flaw that must be fixed. Under the bill, independent subsidiaries of the major power companies will take charge of power transmission and distribution. The experience in Europe suggests that it is critical to cut all ties between traditional power companies and the companies in charge of power transmission and distribution. Such a separation would encourage dynamic market competition by ensuring transparency when new power-generating firms with roots in other industries use transmission lines. It would also help to encourage the use of green sources for power generation.

Both the Liberal Democratic Party and the DPJ, which prepared the bill while in power, should resist moves from the power industry to delay or gut this reform. Such reform is necessary if Japan is to have a flexible and resilient power supply system in which green energy sources can play a greater role in reducing our reliance on nuclear power and fossil fuels.