Creating the Wholesale Market for Electricity in Japan: What Should Japan Learn from Major Markets in the United States and Europe?
The movement of deregulation in Japan’s electric power industry started in 1995 with the revision of the Electric Utility Industry Law. During these past over five years, levels of various discussions have been made in Japan, but remarkable changes of market structure have not appeared except for so far little utilized provision allowing large industrial customers to be supplied by suppliers other than 10 incumbent Electric Power Companies (EPCOs). The big problem confronting deregulation in Japan is the potential market power of these vertically integrated, regionally franchised utilities. This paper proposes the first step to deregulate Japan’s electric power industry at the wholesale level in Japan and of policy lessons from four major deregulated markets: California, PJM, England and Wales, and Norway.