By Hiroyuki Kume
Yomiuri Shimbun Staff Writer
In the past 10 years since the full liberalization of the retail electricity market in Japan, over 800 companies, primarily from unrelated industries such as gas and telecommunications, have entered the market as "new power suppliers," and their share of total electricity sales has exceeded 20%, according to the government and other sources.
However, even many of these new power suppliers that weathered the fuel price surge caused by the crisis in Ukraine are now facing another difficult situation due to escalating tensions in the Middle East.
"(We will) protect households from rising electricity bills amid Middle East tensions."
In mid-March, the new power company Looop Inc. in Tokyo launched a discount campaign for electricity bills under the banner of "emergency support measures."
With crude oil prices soaring due to Iran's de facto blockade of the Strait of Hormuz, the cost of electricity procured by new power companies, including Looop, from the wholesale market is expected to rise.
Unlike the "regulated rates" of major utilities licensed by the government, there is no cap on the extent of rate hikes for new power suppliers. However, Looop appears to have decided to implement the support measure, prioritizing customer retention over profitability out of concern that passing on the costs directly could lead to a significant loss of customers.
The liberalization of the electricity retail market was introduced in 2000, initially targeting industrial customers among others. Learning from the large-scale power outages caused by the March 2011 accident at Tokyo Electric Power Company Holdings Inc.'s Fukushima No. 1 nuclear power plant, efforts to overhaul the system -- in which major utilities held a monopoly from generation to retail -- gained momentum. On April 1, 2016, full liberalization was achieved, extending the market to residential customers.
The number of electricity retailers, which stood at 291 in April 2016, had increased to 808 as of the end of March this year. According to the Central Research Institute of Electric Power Industry, there have been cases where switching electricity providers resulted in savings of 10% or more on electricity bills.
As of December last year, new power companies accounted for 22.1% of total electricity sales. Tokyo Gas Co., the leading new power supplier, has expanded its retail electricity business for households through bundled discounts with gas, bringing its total number of contracts to approximately 4.3 million. Its most recent electricity sales volume surpassed that of Okinawa Electric Power Co., ranking it in 10th behind Shikoku Electric Power Co. In contrast, major power companies have been unable to stem the outflow of customers; TEPCO's electricity sales volume in fiscal 2024 fell by more than 20% compared to fiscal 2016.
To mark the 10th anniversary of full liberalization, the Economy, Trade and Industry Ministry has begun reviewing the system. It plans to amend the Electricity Business Law as early as by the end of March to allow for the revocation of registrations for dormant operators. It is estimated that about 30% of new power suppliers are in a dormant state.
To ensure that new power suppliers can provide a stable power supply, the ministry plans to require them to secure 50% of projected demand three years prior to the start of supply and 70% one year prior, starting in fiscal 2030.
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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April 03, 2026 02:14 ET (06:14 GMT)
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