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Japan eyes electricity deregulation to boost competition

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By Risa Maeda and Linda Sieg

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© (c) Copyright Thomson Reuters 2012.

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The price fixing cartels are forming as we read this! Remember, this is Japan. Fair competition means all the players get together and agree on a "fair" price so everybody gets their piece of the pie.

2 ( +4 / -2 )

It's about time.

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The best thing in the electricity sector is nationalization with a public corporation, so that it doesn't have any incentive to screw people. Even if rates are high, since the profits go directly to the government, it helps keep taxes down. This is a perfect sector for public ownership, because electricity isn't about innovation, but about stability and reliability, which public organization are as good at providing as companies in competition... Maybe even better.

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Deregulating? How is that going to stop the monopolies? If anything, it will strengthen them and promote extortion and price wars. They should be doing the opposite and the J-Gov should control the extortive powers of these electricity cartels.

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The best thing in the electricity sector is nationalization with a public corporation

A public monopoly would just be a feather bed for ama-kudari. There would be no incentive to cut costs or innovate, and if this vast government-owned monopoly violates people's rights or pollutes the environment, who do you complain to? Oh yes. The government. What is needed is a choice of suppliers with a mixture of generation technologies, with the government at arm's length creating and enforcing effective laws on safety and the environment, etc.

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deregulation = prices would go up if anything, governments should have more TEETH when it comes to utility rates like electricity. deregulation is a move backwards, just look at the Philippines, everything is deregulated, previous presidents sold government owned companies to private investors and now utility rates are higher than ever. present politicians now removed the iron hand that kept everything in check during the 80's, and now everything is run by crooks and crocodiles.

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"... boosting the role of renewable energy, such as solar and wind power. Such sources now supply only about 1% of Japan’s electricity if large hydro-electric plants are excluded.

This is especially shocking for a country with virtually no domestic fossil fuels in the year 2012(and which has always considered itself on the cutting edge of technology).

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Jaybee Moriyama

deregulation = prices would go up if anything, governments should have more TEETH when it comes to utility rates like electricity.

I would say the problem is always the extremes of one or the other. Either too much regulation or deregulation always cause some problems.

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So... how will FIT work if they do? Deregulation means that people can pick a utility company that doesn't buy solar energy (reducing it's price) and make feed in absorbed by those that feed in.

The timing of this makes me think it's the work of anti-nuclear lobbies, since the government would also demand all nine companies split off into smaller ones, and likely all the nuclear plants in possession of a few companies with no other resources. Since they can't restart, it would force the companies to shut down and avoid debating the issue civilly.

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paulinusaJul. 15, 2012 - 10:38AM JST

This is especially shocking for a country with virtually no domestic fossil fuels in the year 2012(and which has always considered itself on the cutting edge of technology).

Not really, even the always mentioned germany only produces about 5% through renewables, and they have spent at least 14 trillion yen on solar panels over the last decade (at 500 yen a watt). If you include financial losses due to FIT as well, could be over 20 trillion yen worth. Japan doesn't have cheap land so if you tried it here it would cost several times more (and produce more CO2 than you save)

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basroil: 5% is five times 1% and Germany isn't an island country surrounded by vast amounts of water (wind energy) with nowhere near the potential geothermal energy of Japan.

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well, specifically, when it comes to utility rates like electricity, i'd rather have it regulated. deregulation is just the perfect excuse to raise power rates. if a certain power company invested in newer technology, deregulation is just the perfect excuse to recoup their investments many times over faster. in the long run, power companies together with private power distribution companies will just realize they don't have to compete with each other, they'd just form a cartel and raise power rates all together.

in a speaking engagement a few months ago, the president of the Philippines addressed folks in the southern region of Mindanao where energy demands are not being met sufficiently, told the people literally "if you want more power, you have to pay more!" in Mindanao where various Muslim rebel groups abound, everyone was surprised he came out of there still alive and unscathed!

if the JGov wants to lower electricity rates, they should regulate prices and set it lower. period. nothing wrong with learning from developing nations where oligarchy and imperialism is at it's height right now, right?

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paulinusaJul. 15, 2012 - 11:24AM JST

5% is five times 1% and Germany isn't an island country surrounded by vast amounts of water (wind energy) with nowhere near the potential geothermal energy of Japan.

Including a difference in generation capacity it is closer to 3 times, at ten times the money spent. Hardly a call for cheaper electricity if it costs more to make.

And while Germany doesn't have offshore capability, it has vast stretches of useful land for solar and wind. Japan it too mountainous to support large scale wind/solar farms. And offshore wind is about the most expensive thing you can make considering the deep water Japan has. Cost estimates are at twice that of solar, before you add in the costs for maintenance (between earthquakes, aquatic life, and salt water, costs go up a lot). And Japan has little available geothermal capacity, forced loops shouldn't be used in earthquake zones, and natural source would dry up all the onsen that currently sit on the sites.

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It's not 5%, it's 25%.... I have no idea what basroil is talking about. And how about 10% of total electricity is produced from solar alone in May in Germany?

http://thinkprogress.org/climate/2012/06/12/497984/solar-provides-10-of-germanys-electricity-in-may/

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Thomas AndersonJul. 15, 2012 - 12:42PM JST

It's not 5%, it's 25%.... I have no idea what basroil is talking about. And how about 10% of total electricity is produced from solar alone in May in Germany?

Because solar only accounts for 14.7TWh of 621TWh produced each year. Do the math and it's just 2%. The numbers you tout are not production rather include amount produced locally to offset use. You can find that a good chunk of solar energy any given day is wasted because it is produced when nobody needs it.

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How about tapping volcanoes for electricity?

http://m.wenatcheeworld.com/news/2012/jan/20/tapping-energy-from-inside-the-earth-developers/

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The proponents of present North Korean style economy system cannot understand that there are enormous amounts of people willing to pay more for alternative sources, has always been. The simple truth that money isn't everything is forever lost to them. They are the scoundrel merchants who backstabbed all the Japanese samurai to extinction.

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This kind of monopoly is no longer acceptable in places like the EU. Countries which ended the monopolies and allowed new companies to supply power have seen fair competition resulting lower monthly power bills.

Ask anyone in Sweden and they'll tell you they pine for the days before deregulation. Power companies now pull stunts like scheduling maintenance in the dead cold of winter (sweden is largely heated by electricity), sending spot prices skyrocketing literally 100% (check nordpoolspot.com). And of course the EU is dragging us kicking and screaming into the common market, which is going to further raise our rates as all our cheap hydro power will be sold at the continental rate of fossil fuels. Pure profit for power companies.

-1 ( +0 / -1 )

The price fixing cartels are forming as we read this! Remember, this is Japan. Fair competition means all the players get together and agree on a "fair" price so everybody gets their piece of the pie.

WRONG! The price fixing has ALREADY been in place for decades, thats why electricity is so expensive in Japan!

1 ( +1 / -0 )

GWJul. 15, 2012 - 07:23PM JST

WRONG! The price fixing has ALREADY been in place for decades, thats why electricity is so expensive in Japan!

That's also why the prices haven't budged since 1985 either. The prices are now almost at acceptable levels. At least night-time ones. 60 yen/kWh peak is pretty much criminal though, when lot customers get it at a quarter of the price.

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basroil

Because solar only accounts for 14.7TWh of 621TWh produced each year. Do the math and it's just 2%. The numbers you tout are not production rather include amount produced locally to offset use.

Uh, what? You're obviously talking about last year or before that, since Germany has produced 14.7 TWh from solar in just 6 months this year:

http://cleantechnica.com/2012/07/04/germany-sets-a-new-solar-power-record-14-7-twh-in-6-months/

That’s 4.5% of the total power production during that period (from solar alone, not all renewables combined),

You can find that a good chunk of solar energy any given day is wasted because it is produced when nobody needs it.

covering 10-50% of peak demand every day.

That's just flat out wrong, since the peak demand is usually at when the sun is shining the most.

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Thomas AndersonJul. 15, 2012 - 10:04PM JST

That's just flat out wrong, since the peak demand is usually at when the sun is shining the most.

Typically peak demand is much, much later Japan. For example, peak solar in TEPCO area is around 11-12 (noon), but peak demand is actually between 16 and 20. In no country is peak coinciding with solar, as temperatures don't coincide with solar (they lag due to thermal inertia), and temperature plays a big role in energy use. If you check TEPCO data for solar (http://www.tepco.co.jp/en/challenge/energy/megasolar/ukishima/index_data-e.html, monday 7/9 was a perfect example), you can see that power production is almost a perfect sinusoid with a peak around 11:30 and less than 10% generation is after 16:00.

Energy deregulation would mean that during a time of the day you could get very uneven energy production, especially if people use solar. After all, if base load is supplanted by solar or wind when un-needed or unwanted, it is hardly worth including in energy policy.

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didn't they just basically nationalize TEPCO?

and they want to do this after that?

in most progressive cities in the usa, the power companies have been muicipalized--that is, owned and run by the city as a non-profit public corporation--or something like that.

just look back to the scumbags at ENRON, and if you read the history about PG&E in california, it is easy to see how deep the corruption in the power sector is.

0 ( +0 / -0 )

A public monopoly would just be a feather bed for ama-kudari. There would be no incentive to cut costs or innovate, and if this vast government-owned monopoly violates people's rights or pollutes the environment, who do you complain to? Oh yes. The government. What is needed is a choice of suppliers with a mixture of generation technologies, with the government at arm's length creating and enforcing effective laws on safety and the environment, etc.

As I said, there is little to no innovation in the electricity sector. What kind of innovation would competition yield? Different energy sources? That's not a matter of innovation, that's a matter of capital mobilization, which a monopoly is well placed to make.

As to incentives, it's easy, it's called democracy. As the public monopoly is beholden to the government, people will perceive rate increases as an indirect form of taxation, so the government will put pressure on the company to keep rates low, and still return significant profits, hence an incentive for the administration to cut costs. At the same time, since the government would be defeated electorally if it were to preside over major catastrophes like Fukushima if the electricity company was public, it would put pressure to enforce strict safety guidelines.

When a company is private, the only goal of the administration is profits, which makes them short-sighted, so they may sacrifice safety or low rates to achieve their goal, because they don't care much if people like them or hate them. With enough competition, you may achieve a better balance, but it is hard to achieve and to maintain, as the owners of the corporations generally conclude that collusion is better for their bottom line than competition.

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