The increase in the number of customers of new entrants to the electricity retail market following the market deregulation in April appears to be slowing down rapidly. It may be too early to judge whether this endangers the purpose of the deregulation — to introduce greater competition in power retail and benefit consumers through lower charges and better and more diverse services. Still, the government should assess the situation and see what more needs to be done to ensure a competitive environment in the market previously dominated by regional monopolies.
Capping a series of market liberalization since the late 1990s, electricity retail to small-scale users such as households and small shops was opened up for new entrants to the business in April, enabling consumers to choose the power suppliers they want, no longer bound by the contracts with 10 big power firms that each monopolized supply to the region they service. The deregulation led more than 300 new entrants to the power retail market from various non-electricity sectors, ranging from city gas suppliers such as Tokyo Gas and Osaka Gas, oil wholesalers like JX Nippon Oil & Energy and telecom carriers such as SoftBank. Some of the new power suppliers have been established by local governments.
More than five months on, households across the country that have switched power supply contracts to new entrants account for less than 3 percent of the total, according to the Organization for Cross-Regional Coordination of Transmission Operations, which adjusts electricity supply and demand on a nationwide basis. Most of the customers of the new suppliers are concentrated in the greater Tokyo area and the Kansai region — with roughly 60 percent of them in the area formerly monopolized by Tokyo Electric Power and 20 percent in the area serviced by Kansai Electric Power — likely a reflection of the still limited number of new market entrants in other parts of the country.