More than 60 percent of major new entrants to the electric power industry object to the government’s plan for them to shoulder some of the compensation costs stemming from the Fukushima nuclear crisis, a recent Kyodo News survey showed.
Of the 44 utilities surveyed, 29 said the plan by the Ministry of Economy, Trade and Industry could have a negative impact on their businesses or prevent liberalization of the retail electricity market.
Last April, Japan freed up the retail electricity market, ending the decades-long monopoly of Japanese regional power companies. The new entrants are those that joined the industry after the liberalization of the market and are expected to promote competition, paving the way for lower electricity bills and new services.
But the ministry decided in November last year on a plan to let the utilities share the burden of the aftermath of the nuclear crisis at Tokyo Electric Power Company Holdings Inc.’s Fukushima No. 1 nuclear power plant, devastated by meltdowns triggered by the 2011 earthquake-tsunami disaster.
Meanwhile, 70 percent of the new entrants said they were able to win customers as planned or even more. The survey shows that while the liberalization of the market has proceeded relatively smoothly, systematic problems remain.
A total of 266 companies were registered as new electricity retailers as of March last year. The newcomers include gas suppliers such as Tokyo Gas Co. and Osaka Gas Co., major oil refiner JX Nippon Oil & Energy Corp., telecommunications service provider KDDI Corp. and railway company Tokyu Corp.
Kyodo News sent questionnaires to 50 major new retailers of which 44 responded.
About the ministry’s plan, 13 retailers said that it will have negative effects on their business, while 16 said the plan will have certain effect on the business. Only one company said that it did not expect any effects.
The ministry has deemed users should shoulder their share of the burden as they have widely benefitted from nuclear power before the crisis but 18 companies said they did not agree with the ministry.
A total of 30 companies said that the number of customers they have acquired so far reached or topped initial goals while 11 said that they were not able to win customers as expected.
The survey found that 41 companies were satisfied that they had entered the electricity retail market because they were able to connect well with customers which contributed not only in boosting profitability but also in enhancing the recognition of the companies. No company said it regretted entering the market.
On future management, 18 said they will expand their business operations while 8 companies said they will maintain the status quo. No companies said they will pull out of the market or consider scaling down operations.
Meanwhile, Japan’s energy sector saw more deregulation with the city gas market freed up Saturday, allowing major utilities to enter the market and enhance competition with gas company rivals in the industry.
Utilities including Chubu Electric Power Co. and Kansai Electric Power Co. have launched special websites introducing their lower gas price plans.
But compared with the liberalization of the retail electricity market, the gas retail market has attracted fewer entrants.