The comprehensive alliance struck recently between Tokyo Electric Power Co. and Chubu Electric Power Co. in their thermal power generation business raises expectations of a further shakeup in the power industry — likely involving companies from other sectors — ahead of the full liberalization of the retail sale of electricity in 2016.
While Tepco and Chubu Electric have their own reasons for the accord, it should be a welcome development if the tieup results in cutting electricity costs for consumers.
According to the basic agreement announced Oct. 7, the two companies will create a jointly owned firm that will integrate their liquefied natural gas (LNG) procurement to reduce fuel purchasing cost. The two firms combined buy roughly 40 million tons of LNG annually — or nearly half Japan's total imports of 88 million tons — and they hope the expanded volume will boost their power to negotiate procurement pricing with producing countries.