Japan weighs energy deregulation

When Tokyo’s Shin-Marunouchi building decided to switch from Tokyo Electric Power, which has a near monopoly on the energy market, to a smaller, greener electricity provider, experts saw it as the first step in deregulating Japan’s energy market.

Although the deal was perfectly legal, it was regarded as highly unusual. And even though Japan partially deregulated the electricity industry 10 years ago, fewer than one in 20 major customers have switched energy providers, according to The Financial Times.

“There is still no real competition,” said Hirokazu Okumura, a former industry regulator.

However, Tokyo Electric Power is now working with policy makers to potentially split up its generation and distribution operations – the first step to creating a more competitive energy market and lowering electricity rates.

The situation mirrors what is going on in many U.S. states, including Ohio, where the Public Utilities Commission recently allowed retail electricity suppliers to cut into state utility American Electric Power’s customer base.

According to Columbus Business First, AEP has been able to keep competition low through low rates and favorable policies. But as the utility increased its rates over the course of several years, many customers in AEP’s territory began looking to switch energy providers to lock in lower rates.