All new thermal power development should be made subject to competitive bidding starting in fiscal 1999, a government advisory panel said in an interim report released Tuesday.
The Electricity Utility Industry Council, an advisory body to the minister for international trade and industry, also called for setting up a watchdog organization to ensure transparency and fair competition in bidding. The proposals were made in line with the government's pledge to reduce the nation's electricity costs to an internationally competitive level by 2001. Electricity cost reduction is one of the pillars in the ongoing economic structural reform initiated by Prime Minister Ryutaro Hashimoto.
Japanese electricity costs -- roughly 30 percent higher than those in other industrialized nations -- have been blamed as one big factor behind the nation's overall high cost structure. In Tuesday's report, the council said that independent power producers have potential capacity for supplying a maximum 52 million kw of electricity under the full-fledged bidding system, compared to the average 28 million kw under the current limited bidding system.
The watchdog, which is to be created as an affiliate to the council, is necessary to provide fair ground for those independent producers in competing against the nation's 10 major utility companies, which will serve both as bidders and tenders, according to the report.
The council also called for introducing a series of incentive rates, including some to encourage nighttime use of electricity to alleviate the peak load during the daytime.