Tenders
Regulatory Developments
Since March two additional enterprises have registered as special-scale electricity utility supply business operators (SSEUSBO), bringing the total number of SSEUSBOs registered since the second stage of electricity liberalization was implemented on March 21 2000 to nine. The nine entities that have notified the Ministry of Economy, Trade and Industry to date (as required before commencing operations as a SSEUSBO under the amended Electricity Utilities Industry Law) are as follows:
| Name of SSEUSBO (parent entity) | Location of Generation Plants (owners) | Capacity (kilowatts - kW) | Date of Ministry Notification |
| Diamond Power KK (Mitsubishi Corp) | Ibaragi Prefecture Kanagawa Prefecture Fukushima Prefecture Mie Prefecture | 35,000
| June 19 2000
|
| Marubeni Corp | Nagano Prefecture | 32,200 | August 4 2000 |
| Asahi Glass Co, Ltd | Fukuoka Prefecture (Asahi Glass Co, Ltd) | 40,900 | September 20 2000 |
| E-Rex KK (Nihon Tanshi Co, Ltd) | Miyazaki Prefecture (Asahi Chemical Industry Co, Ltd) | 33,000 | January 22 2001 |
| Nippon Steel Corp | Fukuoka Prefecture (Asahi Glass Co, Ltd) Shizuoka Prefecture (Toho Rayon Co, Ltd) Shizuoka Prefecture (Asahi Kasei Co, Ltd) |
| January 26 2001 |
| E Net KK (NTT Facilities, Tokyo Gas, Osaka Gas) |
Chiba Prefecture Kanagawa Prefecture Osaka Prefecture |
| January 30 2001 |
| Summit Energy KK (Sumitomo Corp & Sumitomo Kyodo Electric) | Ehime Prefecture (Sumitomo Kyodo Electric) | 50,000 | February 9 2001 |
| Daio Paper Corp | Ehime Prefecture | 506,110 | March 22 2001 |
| Sanix Inc | Hokkaido Prefecture | 74,000 | April 9 2001 |
The number of tenders by large-scale consumers (made possible in the second round of reforms to the Electricity Law) for electricity supply is increasing. However, a majority of the tenders have been won by the incumbent electric utilities (due to the still limited supply capacity of the new entrants, the incumbent utility has often been the only bidder), resulting in little reduction in electricity prices.
New entrants have won tenders for the supply of electricity to three facilities.
| Location | Facility | Contract Electricity (kW) | Winning Company | Other Participants | Actual Price Reduction |
| Fukuoka City | City Agency Building | 3,100 | Nippon Steel Corp | Kyushu Electric and E Rex | 15.3% |
| Chikushi Region | Kyushu University | 4,000 | Nippon Steel Corp | Kyushu Electric | 8% |
| Kagoshima Prefecture | Prefecture Agency Building | 4,500 | E Rex | Kyushu Electric | 21.5% |
Nippon Steel and E Rex became the third and fourth new entrants to win an electricity tender after Diamond Power (the Ministry of Economy, Trade and Industry head office) and E Net (government building in Osaka City).
The tender process is having the desired effect of reducing some prices. However, new entrants do not have sufficient supply capacity to be able to enter into all tenders at this stage.
In response to the Tokyo harbour waste factory opting to put the sale of its surplus electricity to tender, three new entrants - Diamond Power, Nippon Steel and E Rex, and Tokyo Electric Power Company have decided to enter bids for the surplus electricity, marking the first tender for the sale of surplus electricity.
A full review of the results of market liberalization is scheduled for 2003. In the meantime Enron announced proposals for the reform of the Japanese electricity market on May 15 2001. While the Ministry of Economy, Trade and Industry have initially adopted an open stance towards these proposals (which include the commercial break-up of generation, transmission and distribution sections of the existing utilities, the sale of generation assets of Electric Power Development Company (to be privatized in 2003), full liberalization of retail electricity supply and the development of an electricity pool that allows for bilateral financial trading), the response from the incumbent electric utilities has been defensive.
For further information on this topic please contact Paul Davis or Anne Hung at Baker & McKenzie GJBJ by telephone (+813 3403 5281) or by fax (+813 3479 4224) or by e-mail ([email protected] or [email protected]).
The materials contained on this web site are for general information purposes only and are subject to the disclaimer