Contributed By Nagashima Ohno & Tsunematsu
As described in 1.1 Principal Laws Governing the Structure and Ownership of the Power Industry, the vertical integration and the regional monopoly in the generation sector and the retail sector have been gradually relaxed and liberalised since 1995.
At the time of writing, the electricity industry is in the middle of structural reform that consists of (i) establishing a system to efficiently manage electricity generated by power producers in the country across the transmission networks, (ii) full liberalisation of the retail sector and (iii) a 'legal unbundling' of the transmission and distribution sector from the generation and retail sector.
OCCTO was established in 2015 and the retail sector was fully liberalised in 2016, accordingly. With respect to the liberalisation, however, as Major Utilities and their affiliates have a dominant share in the market, their existing basic retail tariffs of electricity have been regulated in order to secure fair competition with other retailers, which regulations are expected to be lifted some time after 2020 (when the 'legal unbundling' occurs) when the government views that a sound competitive market has been established.