The government of Japan is reported to be facing an uphill battle in its efforts to deregulate the nation's power transmission networks, because regional utilities are expected to mount fierce protests.
The Ministry of Economy, Trade and Industry (METI) is considering issuing separate licences to power generators, transmitters and retailers to encourage new entrants and spur competition.
The power transmission networks are currently owned and managed by regional monopolies. Each region in Japan has, in principle, just one network. The government, which has been weighing various plans to reform the power industry following the Fukushima disaster, contends that the neutrality of such operations should be enhanced by separating power generation and transmission.
Europe and the USA have deregulated power grids to create competitive markets. European utilities have been split into entities specialising in either power generation or transmission. In the USA, however, power companies have retained ownership of the networks, while regional independent transmission operators have taken over the management of power grids.
Many of Europe's utilities were originally state-run, while private-sector power firms largely dominate in the U.S., resulting in these different approaches.
Japan's situation is similar to that of the USA in that its utilities are private-sector concerns. However, splitting up a private-sector power provider could infringe on the Constitution's protection of property rights according to a senior METI official.
With that in mind, METI is devising plans based on the US model. A leading proposal calls for setting up one independent operator each in eastern and western Japan, as defined by the areas that have different AC frequencies, 50Hz and 60Hz.
Sharing grids in broader geographic areas could make it easier for power providers to mutually supply energy during emergencies. Having independent grid operators will encourage new entrants, eventually leading to lower power prices. But critics warn that efficiency may erode if tasks are handed over from private-sector utilities to independent operators, which will be essentially public entities.
Power utilities will strongly object to the break-up plan even if they are allowed to remain the owners of transmission networks. METI attempted to set up independent operators in 2002 only to give upafter powerful protests from utilities. There is no reason to suppose that the task will be any easier this time around.
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