In Japan, full retail liberalization of the retail electricity market started in April 2016. Before liberalization, there were only ten regional electric power companies, such as Kyushu Electric, Tokyo Electric, Kansai Electric, Chubu Electric, etc. Those companies were the only providers allowed to sell electricity in their respective geographical regions.
However, with the liberalization of the electric power industry, many new and existing companies are now free to enter the electricity retail business – this development has brought many new operators into the market, and these can be broadly classified into the following categories –
Traditional energy companies – these companies have been active in various sectors in the energy business, such as gas and oil, for many decades and are now aggressively entering the electricity retail business as well. In many cases, they have their own power plants.
Telecommunication companies – mobile phone and Internet service providers, are also entering the electricity retail business. Telecommunications, like electricity, is a form of infrastructure and carries an identical fee structure involving monthly usage costs. This business compatibility makes it easy for these companies to operate in the electricity retail business, and they often offer discount plans that combine telecommunication lines and electricity rates.
Renewable energy companies – engaged in solar and wind power, these modern generation energy firms are also entering the electricity retail business. Many of them are attempting to differentiate themselves from their competitors by adding value in terms of environmental friendliness and energy conservation.
Others – various companies from a wide variety of diverse industries, including railroad companies, travel agencies, housing manufacturers, and electronics retailers, have entered the market to sell electricity too. Most newly active power companies are focusing on selling electricity at lower rates than those offered by major power companies. They are trying to increase the number of subscribed clients by winning on price.
Additionally, depending on each of these new power companies’ original industries, it will seek to leverage its market advantage by offering related incentives. For example, in the case of gas utility-affiliated or renewable energy electric power companies, which can often be related industries, it is common for clients to receive discounts by signing a contract with a gas company as a set of related subscriptions. In the case of telecommunications industry-affiliated new electric power companies, discounts are often applied when the electricity contract is combined with a mobile phone or Internet contract.
It is not uncommon for electric utility companies to also offer points that can be used at convenience stores, supermarkets, fast food outlets, etc., in conjunction with electricity charges. While this does not directly reduce electricity rates, it can lead to savings in the household budget if used effectively. In addition, an increasing number of companies are offering unique services such as energy-saving diagnoses, troubleshooting of water and plumbing-related issues, and even home-related locksmith services.
One of the major advantages of signing up with a “new” electric power provider is choosing the company that best suits your lifestyle and offering relevant incentives to you and your family.
However, a possible disadvantage to using their services is that electricity rates may be higher under certain conditions, and a penalty fee may be involved when terminating the contract. One significant factor to review is whether the electricity rate plan is “market-linked”. Market-linked plans are structured so that the unit price of electric consumption is determined in conjunction with the trading price on the Japan Electric Power Exchange (JEPX) – a non-profit organization that provides free and unfettered access to electricity (it is the only electricity trading market in Japan, and has been established in response to the trend toward electricity deregulation.) While electricity can be supplied at low prices when JEPX prices are low and stable, this also includes the risk that if the transaction price on JEPX soars due to some factor or another – electricity prices will increase accordingly.
For instance – a price spike in JEPX that began in late December 2020 was largely due to a nationwide power supply-demand crunch caused by a shortage of liquefied natural gas (LNG), the main raw material for power generation in Japan, combined with a sharp increase in electricity demand due to a series of cold spells.
So, while it’s valuable to compare services and prices to match your needs, it is also essential to check the latest energy market trends, offers, and promotions to find the best contract for your lifestyle and spending budget requirements.
