TOKYO Dec 16 Japan's trade ministry panel on
Friday agreed to set up a baseload power market to ensure equal
access to cheap power supplies for new power retail companies as
part of reforms to foster competition in the market.
The country's retail power market was fully liberalised in
April, but most of the power generated from nuclear, coal or
large hydro plants is still in the hands of former regional
power monopolies, limiting opportunities for new entrants.
The new entrants, lacking enough baseload power, mostly rely
on higher-cost load from plants such as gas-fired facilities
that adjust output as demand fluctuates.
The establishment of a baseload power market by 2019/20 is
designed to ensure equal footing for all power firms, the trade
industry panel agreed in an interim report on Friday.
The rapid rise in renewable power on the back of a
feed-in-tariff scheme in 2012 following the Fukushima nuclear
disaster, has reduced incentives to build new fossil fuel-fired
To ensure that fossil fuel plants can maintain a stable
income, the panel also agreed to set up a mechanism in 2020/21,
similar to one in the United States and Europe, which allows
power retailers to buy fossil plants' power generation capacity.
The panel also aims to set up a market for non-fossil fuel
fired power to fix the problem of limited opportunities for
procuring renewable power.
Chairman of the federation of Japan's former power
monopolies, Satoru Katsuno, who also serves as Chubu Electric
Power's president, said on Friday the reforms would
have a big impact on their businesses and asked for the
government's help in streamlining various measures.
The panel also agreed to spread widely compensation costs
for the Fukushima nuclear disaster and pass on part of the
costs, equal to up to 2.4 trillion yen ($20.32 billion), on
power fees, over 40 years from 2020.
Japan's government last week nearly doubled its projections
for costs related to the Fukushima nuclear disaster to 21.5
trillion yen, including about 8 trillion yen for compensation,
putting up pressure on operator Tokyo Electric Power to
step up reform and improve its performance.
($1 = 118.1100 yen)
(Reporting by Osamu Tsukimori. Editing by Jane Merriman)