The Ministry of International Trade and Industry announced Monday it will procure electricity through competitive bids starting Aug. 31.
The move, the first of its kind by a central government entity, is in response to the partial liberalization of electricity retailing in March, which made some 30 percent of Japan’s 15 trillion yen power market subject to open competition.
MITI, which oversees the nation’s utilities, is calling for bids to cover electricity demand in its building in Tokyo’s Kasumigaseki district for one year starting Aug. 31. The deadline for bidding is Aug. 10.
Ministry officials said they hope that the procedures for the bidding will set a model for other government agencies to take advantage of the liberalization, which aims to lower the nation’s electricity costs.
“We hope that our electricity procurement cost will be lowered as a result of fair competition and that this method will spread (to other government agencies),” one official said.
Bidders are asked to present their respective electricity rate systems, from which the ministry will pick the most favorable one for its estimated electricity demand, hopefully reducing its power costs, which currently amount to some 30 billion yen a year.
With the electricity market protected under heavy government regulations, the nation’s 10 major utilities have long enjoyed an effective monopoly within their respective service areas.
The latest liberalization move, however, has enabled large-lot electricity users — such as office buildings, hotels and factories — to purchase electricity from power companies based outside their region as well as from nonutilities.
In response to the move, foreign energy firms and Japanese trading companies are preparing to enter the market.