TOKYO — The Japanese cabinet approved a proposal Tuesday to revamp the country’s troubled electricity industry and foster competition by obliging utilities to split power generation and distribution into separate businesses.
The plan is meant to encourage more innovation and modernization of the power grid as the country grapples with its energy policy after the shutting down of almost all its nuclear power plants after the March 2011 earthquake and tsunami disaster at the Fukushima Daiichi power plant.
The plan requires parliamentary approval. First proposed years ago, it was included in a series of economic overhauls being discussed by Prime Minister Shinzo Abe’s administration that are intended to improve Japan’s competitiveness. The power companies face soaring costs for imported fuel and for maintaining nuclear plants closed for checks after the Fukushima disaster.
Mr. Abe told a meeting of his economic advisers that he wanted to expedite restructuring of Japanese industries to eliminate production constraints and facilitate more business activity and investments, according to a summary of the meeting posted on the government’s Web site.
Such changes are part of Mr. Abe’s three-pronged strategy for reviving the stagnant Japanese economy, along with more aggressive monetary easing and increased government spending. Mr. Abe instructed Industry Minister Toshimitsu Motegi to submit the power measure to the Parliament as soon as possible. He also urged Mr. Motegi and Environment Minister Nobuteru Ishihara to work together on strengthening environmental impact assessments to promote use of environmentally friendly and high-efficiency thermal power.
Mr. Abe said the next five years would be a time of “emergency structural reforms” for Japan. “We plan to commit as many resources as possible” to that effort, he said.
Mr. Abe has indicated that he favors restarting nuclear reactors if they meet new, stricter safety requirements, though the government is also rushing to increase use of other forms of energy like solar, wind and geothermal power. Such efforts have been slowed by the structure of the power grid, which was designed solely to meet the needs of the regional utilities. The proposed changes would encourage greater use of renewable energy through increased competition, experts say.
The proposal aims to “expand choices for users and business opportunities for operators,” according to a statement by the Ministry of Economy, Trade and Industry. The changes would be carried out in three phases, beginning in 2015 and ending in 2020.
As a first step, the government intends to create a framework to balance regional power supply and demand. It would fully liberalize power sales and generation by about 2016, aiming to separate fully the power generation and transmission arms of each utility in 2018-20.
The politically powerful utilities have resisted such changes but have little choice, given the parlous state of their finances. Tokyo Electric Power Co., the country’s biggest utility and operator of the Fukushima plant, was nationalized after its finances deteriorated because of rising costs from the nuclear disaster.
Article source: http://www.nytimes.com/2013/04/03/business/global/japanese-cabinet-proposes-energy-sector-overhauls.html?partner=rss&emc=rss