Contributed By Nagashima Ohno & Tsunematsu
Pursuant to the Electricity Business Act, the terms and conditions of transmission and distribution services need to be approved by METI. The matters to be set out in the terms and conditions and the methodology to compute service charges are set out in the regulations listed below. To date, English translation is not available for those rules promulgated by METI.
The rate of tariffs and the terms and conditions of transmission and distribution services are proposed by an operator of General Transmission and Distribution Business, and are fixed upon the approval of METI based on the advice of EGC. METI’s standard review period is four months.
The terms and conditions of services are reviewed to see if the following requirements are satisfied:
At the time of writing, the rate of tariff is computed based on the fully distributed cost method, the principle of which is that the tariff will be determined such that projected revenues of the tariff of the forthcoming three years will balance with the sum of (i) efficient and necessary costs (including depreciation cost and capacity charges for balancing powers) of providing services of the forthcoming three years and (ii) the capital cost of the forthcoming three years.
Pursuant to the Electricity Business Act, an operator of General Transmission and Distribution Business is obliged to provide access to its transmission and distribution network on a non-discriminatory basis.