Energy crisis

As Japan is entering the phase of structural reforms, deregulation is expected to accelerate. Nearly 40% of all the industries in Japan are still regulated in one way or another. The success of the Japanese renewal surely depends on how those regulations are abolished. There are, of course, regulations that should not be thrown away. The ones that rule the security or the stability of our life ought to be remained. Except them, there is absolutely no need for unnecessary regulations, which raise Japanese living costs.

Meanwhile, controversy over the deregulation of the electricity market has been raised in Japan. Electricity, needless to say, is one of the most important things in everyday life. No one could put up with the life without electricity in modern societies. Neither do business worlds. The damage would be rather bigger. Workers couldn't use computers, production lines in factories would stop. Goods might not be available any more. In this sense, electricity is tremendously public and social necessity.

The wind of deregulation has just blown into that electricity market. Japan is notorious for the high rate in electricity. Among developed countries, the rate of the Japanese electricity stays at the highest level because it has been regulated by the laws. In response to the criticism, deregulation has started in the sector. At the first stage, any other firms than electric power companies have been able to sell electricity only to the big consumers using more than 20000 bolts such as factories or commercial use buildings since March 2000. This market for business use accounts for only 30% of all the electricity markets in Japan. The rest of 70% dominating the individual market are still regulated. On top of that, only a few newcomers have participated in the partly deregulated market. Therefore, the first stage of deregulation could not stimulate the whole marketing mechanism to bring down the electricity rate.

Despite the demands to scrap the control, a risk involving the deregulation has come to light not in Japan but in California(US). The risk is that electricity is not supplied by electricity distributors. In a word it's the risk of power failure. This is caused by the result of distorted deregulation. In the American state, the wholesale rate was liberalized while the retail charge was still controlled by the State. What happened next, the distributors had to provide electricity to consumers at the fixed low rates even though the wholesale rates were traded much higher in the free electricity market due to over-demands. As a consequence, the retailers have come to incur the loss seriously, resulting from the back spread between the retail and wholesale rate. The distributions of electricity have sometimes stopped.

There is, in principal, no separation of generation and transmission operations right now in Japan. Energy crisis as happened in California is unlikely to occur. As early as 2003, however, the government is going to review the electricity regulations. We hope well-balanced structural reforms especially in the sector affecting our life. The natural winds are not enough to supply electricity throughout Japan.

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