Last Updated July 22, 2019

Law and Practice

Authors



Nagashima Ohno & Tsunematsu is one of the foremost providers of international and commercial legal services based in Tokyo. The firm has over 450 lawyers, including over 30 experienced foreign attorneys from various jurisdictions, and its overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms throughout Asia and other regions. The firm regularly advises leading power utilities, trading companies and investors on their energy projects as well as regulatory matters, and financial institutions on financing on those projects. The firm has dealt with a number of renewable power projects since the introduction of the feed-in tariff in Japan. The firm represented Tokyo Electric Power Company Group on establishing an alliance platform with Chubu Electric Power Co, Ltd in the fuel and power business (including the establishment of a joint venture company, JERA).

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.

  • Executive rules of Electricity Business Act (denkijigyoho shikokisoku).
  • Rules on methodology to compute tariffs of transmission and distribution services (ippan sohaiden jigyo takusokyokyu to yakkan ryokin santei kisoku).
  • Rules on methodology to balance income and loss from transmission and distribution services (denkijigyo takusokyokyu to shushikeisan kisoku).

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:

  • the rate of tariff is the sum of efficient cost of services plus fair rate of fair margin, with an assumption that the business is operated in an efficient manner;
  • the terms and conditions do not significantly undermine accessibility to the transmission and distribution services;
  • the method of computing the tariff is clearly and fairly set out;
  • the allocation of responsibility as well as cost sharing between an operator of General Transmission and Distribution Business and users of the transmission and distribution network is clearly and fairly set out;
  • the terms and conditions do not discriminate against any specific person; and
  • the terms and conditions do not hinder public interest.

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.

Nagashima Ohno & Tsunematsu

JP Tower
2-7-2 Marunouchi
Chiyoda-ku
Tokyo
Japan
100-7036

+81 3 6889 7000

+81 3 6889 8000

info@noandt.com www.noandt.com
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Authors



Nagashima Ohno & Tsunematsu is one of the foremost providers of international and commercial legal services based in Tokyo. The firm has over 450 lawyers, including over 30 experienced foreign attorneys from various jurisdictions, and its overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms throughout Asia and other regions. The firm regularly advises leading power utilities, trading companies and investors on their energy projects as well as regulatory matters, and financial institutions on financing on those projects. The firm has dealt with a number of renewable power projects since the introduction of the feed-in tariff in Japan. The firm represented Tokyo Electric Power Company Group on establishing an alliance platform with Chubu Electric Power Co, Ltd in the fuel and power business (including the establishment of a joint venture company, JERA).

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