Over 3 million households in Japan have switched their electricity suppliers to new entrants to the retail power market since the market was fully liberalized last April.
Although the figure accounts for only 5 percent of overall household subscribers, the trend is expected to gather steam this year as sales of city gas are also set to be opened up next month.
Before the market was liberalized, 10 major electric power companies, including Tokyo Electric Power Company Holdings Inc., had a stranglehold on the ¥8 trillion electric power business, controlling power generation, distribution and retail sales.
The Ministry of Economy, Trade and Industry said that 3.11 million households had changed their power suppliers to new entrants as of the end of February.
The figure translates into a monthly increase of 200,000 households, mainly in large metropolises including Tokyo and Osaka.
On the supply side, many companies from various industries, including telecommunications, gas and railroads, have entered the power market. As of the end of February, a total of 383 companies were registered with the ministry.
They are offering various forms of discount services, including a package combining gas and phone service as well as electricity, a move further intensifying competition with major utilities.
Household moves to switch to new power suppliers have also picked up regional areas.
In the region covered by Chugoku Electric Power Co., 34,100 households changed power suppliers, marking a 5.4-fold jump from half a year ago, whereas 18,800 households did so in the area covered by Hokuriku Electric Power Co., a 3.7-fold increase.
Price competition in urban areas has reached its limit, prompting potential new entrants to turn to regional markets, said an official of a company that entered the power market recently.
Kobe-based Koyo Electric Co., for example, has joined hands with the cities of Narita and Katori in Chiba Prefecture to create a new power company.
Ahead of the scheduled full opening of the retail gas market in April, four major electric power companies — Tepco, Kansai Electric Power Co., Chubu Electric Power Co. and Kyushu Electric Power Co. — have cleared the procedures for getting into the gas business.
The four, which have imported liquefied natural gas to generate electricity, will use it to produce city gas.
Tepco, focusing on business rehabilitation as it continues to reel from the March 2011 nuclear meltdowns in Fukushima, will enter the gas market in July. The three other companies, meanwhile, have outlined the new services through which they will offer city gas at more competitive prices than those currently provided by major city gas suppliers, including Tokyo Gas Co. and Osaka Gas Co.
Entering the gas business is considered tougher than entering the power market as it requires huge investments for material procurement and construction of pipelines and other facilities.
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