The Abe administration has readied two bills for finalizing the liberalization of the nation's electricity and city gas industries. Yet both pieces of legislation include a provision that leaves room to put off the last phase of deregulation if supply and financial conditions are unfavorable to the utility companies. The government needs to ensure that complete liberalization takes effect without delay.
Under a bill to revise the electricity business law, power transmission and distribution sections of major power companies will be spun off in April 2020. A bill to revise the gas business law, which calls for full liberalization of the gas retail market by 2017, mandates that major gas companies in Tokyo, Nagoya and Osaka separate their gas pipe management sections into new entities in April 2022.
The first bill represents the final stage of Japan's moves to deregulate a power market dominated by regional monopolies, which has been gradually liberalized since 1995. Companies from various sectors have already entered the business of selling electricity to large-scale users such as plant operators. In 2014, these entrants deprived major suppliers of a market share worth some 3 million kW of electricity, equivalent to the output capacity of three nuclear power plants combined.
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