ENECHANGE Ltd. (Head Office: Chuo-ku, Tokyo; Representative Director & CEO: Yohei Kiguchi) believes that the realization of comprehensive, future-oriented energy policy reform will lead to growth for Japan, including lower energy bills; improved services for consumers; a healthy, transparent market environment; and increased investment in green transformation (GX). We are pleased to announce that we have held dialogues  with many experts, political and business leaders, and individuals in the energy industry. We have prepared “Our View on Future-oriented Energy Policy Reform”, which summarizes the challenges and measures to be taken.

Current issues

ENECHANGE believes that the realization of comprehensive and future-oriented energy policy reform is the key to Japan’s growth strategy, including lower energy bills; improved services for consumers; a healthy, transparent market environment; and increased investment in GX.

Unfortunately, however, the recent revelations of scandals involving former general electric utilities, combined with the increase in regulated tariffs, have led to negative perceptions of energy companies and growing doubts about energy policy reform. This is a situation that cannot be overlooked.

Based on relevant discussions with a number of retail energy providers, financial market participants, university professors, former and current employees of former general electric utilities, the media and others, we have summarized the challenges and proposed actions to realize the future-oriented energy policy reform.

 Our view on future-oriented energy policy reform

1.The need for future-oriented energy policy reform towards GX realization

With 10 years having passed since the Cabinet decision on energy policy reform in 2013, interest in this reform is growing with the GX Promotion Bill passing through Parliament. The energy industry is an important industry that will play a central role in the decarbonized society of the future, and the response to a series of scandals by former general electric utilities should not be a short-sighted punitive measure. Instead, the policy reforms considered should be future-oriented.

2.On the electricity transmission and distribution sector

As a response to the problem of unauthorized viewing by transmission and distribution operators, there have been proposals from various stakeholders for the separation of ownership of transmission and distribution. While this may be an effective option in the long term, the detailed design of the system requires time for consideration due to fears of infringement of property rights under Article 29 of the Constitution, among other factors. 

Therefore, we believe that all energy transmission and distribution companies should promptly implement the most stringent and effective policies of each of the proposals presented by the companies. In addition, we believe that Japan should promptly consider and implement the same strict legal separation of duties (ITO) as Germany in order to further strengthen discipline, and also establish strict penalties for violators based on the assumption that information will be leaked, as in the case of insider trading regulations.

3.With regard to the electricity generation sector

With regard to the electricity generation sector, we consider that there are several issues related to internal and external non-discrimination pricing practices.

We believe that internal and external non-discrimination should not be only a voluntary commitment of the former general electric utilities, but instead should be enshrined in law. However, we believe that generation plants subject to internal and external non-discrimination should be limited – for example, to plants built before the start of transitional measures at the end of 2010 and built based on the total cost method assuming regulated tariffs.

In addition, it should be ensured that the capacity market does not have an undue influence on the competitive conditions in the retail sector. This could be achieved, for example, by ensuring transparency in the accounting of each sector, that the impact of the capacity market is neutral on the income and expenditure of the generation sector, and that retail sales are conducted with an appropriate level of profit in the retail sector. The guidelines and legislation should make it mandatory for the ETC and others to conduct periodic audits of the capacity market at least once a year.

4.With regard to the retail sector

With regard to regulated tariffs, there are concerns that they are distorting the liberalized market. Regulated tariffs currently represent 53% of contracts and 13% of electricity sales and are a cheap tariff option under the current circumstances. We believe that it is necessary to continue energy policy reforms through the elimination of regulated rates on the condition of thorough internal and external non-discrimination. 

In addition, appropriate steps will need to be taken to notify the public of the elimination of regulated rates, ideally during a defined information campaign period. This includes creating lists of retail energy providers, including new entrants which consumers can sign contracts with. It also includes listing price comparison service providers which consumers can consult, and other information as needed to ensure consumers can understand the whole array of options available to them.

For more information on “Our View on Future-oriented Energy Policy Reform “, see here.

■ENECHANGE Ltd.

ENECHANGE is an energy technology company that promotes a carbon-free society through digital technology with the mission of Changing Energy For A Better World. We offer services based on data utilization in the field of the 4Ds of Energy: Deregulation, Digitalization, Decarbonization, and Decentralization. Our company’s roots come from an energy data lab at the University of Cambridge, U.K., a country where liberalization is mature. ENECHANGE has a British subsidiary, SMAP Energy Limited, as well as a global network and analytical technology for energy data.

URL: https://enechange.co.jp/en/

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ENECHANGE Ltd.
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