Tokyo Electric Power Co. used to be the only electricity supplier in Tokyo and the rest of the Kanto region, as well as parts of Yamanashi and Shizuoka prefectures.
But that’s no longer the case, thanks to the partial liberalization of the electricity market that began in March 2000, paving the way for companies and other major power users to find other sources of electricity.
A third of the large buildings in the heart of Tokyo get their electricity from companies other than Tepco, according to Shigeru Kimura, Tepco’s executive officer in charge of sales and business.
He said Tepco has lost completely to new rivals when it comes to selling electricity to buildings that count government and public offices among their tenants.
“We have no chance to win because enterprises newly participating in the electricity industry are certain to come up with lower rate proposals than us,” Kimura said.
Tepco’s loss of electricity supply contracts as of Oct. 1 totaled 1.3 million kw in about 400 cases.
That’s the same amount of electricity produced by a nuclear reactor.
New participants in the electricity supply business include gas, steel, chemical and paper companies, which generate power by using the steam produced by their factories. Their production costs are said to be lower than those of typical utilities, whose power lines can be used to send their own juice.
Ten new power supply companies are in operation in Japan. Viewed as promising new undertakings, they have been attracting investment from trading, information and telecommunications firms. Their targets are local governments, universities, hospitals and supermarkets.
The Kanagawa Prefectural Government opened bidding in April for a new electricity supplier for its building and ended up switching from Tepco to eRex Co., whose investors include Hitachi Ltd.
“We will conclude contracts with whoever comes up with low rates since there is no difference in electricity, wherever it comes from,” said a prefectural official in charge of electricity supply.
The Hyogo Prefectural Government signed a power supply contract in 2002 with Ennet Corp., a Tokyo-based energy network company supported by such major firms as NTT Corp. and Tokyo Gas Co.
But Kansai Electric Power Co. came back and won the contract in 2003.
Kepco beat Ennet in bidding held by state-run Osaka University with facilities in both Suita and Toyonaka cities in Osaka Prefecture in July this year.
But Takashi Teramoto, a member of Kepco’s board, said, “We’re going to wear out the (company’s) strength if we keep cutting down on rates” to win bids.
The trend toward shifting from electric utilities to newly formed power firms is spreading in regional areas, too.
The Takamatsu branch of the Izumi Co. supermarket chain has switched from Shikoku Electric Power Co. to Daio Paper Co., while the city of Hiroshima and the Hiroshima Prefectural Government replaced Chugoku Electric Power Co. with trading house Marubeni Corp. to power its offices in April.
In Kyushu, the Kagoshima, Oita and Kumamoto prefectural government buildings, as well as Saga University and two dozen companies, have abandoned Kyushu Electric Power Co. for new power utilities.
The partial liberalization of the electricity market took force in 2000 in an attempt to reduce electricity rates and help corporations boost international competitiveness. Japan’s electricity rates were higher than those in the United States and Europe.
The liberalization scheme was initially designed to cover companies whose total electricity needs exceeded 2,000 kw and whose power was being provided by high-voltage cables. The concept was subsequently extended to other structures, including large buildings and department stores, and is expected to cover smaller buildings that require more than 50 kw of electricity starting next April.
Industry sources say such progress will account for about 63 percent of total power consumption in Japan, giving rise to the possibility that latecomers will seek business opportunities to expand sales at a stroke.
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