Japan passes law to start reform of electricity sector

I hope that the energy sector here does not go the way it has in Britain. Apparently privatization was going to bring better value energy to the consumer and better infrastructure service. The costs have spiraled out of control to keep profits in investors pockets, so I believe the best way Japan would be to completely nationalize the energy industry and keep prices capped. The priority should be low cost energy for the consumer not profits for fat cats but ho hum.

"to completely nationalize the energy industry and keep prices capped. "

There is no free lunch. If the consumer does not pay the full price, then the taxpayer will.

@Guillaume

It's not a question of a free lunch.

British utilities are hugely profitable, while 2M+ households experience fuel poverty, defined as when a household's fuel costs cause them to fall below the official poverty line.

hopefully Japan will continue to develop solar energy and bring down prices. utilities working with politicians seems certain to keep prices high, and a cozy relationship between the two.

So they are going to make one national grid? Who is going to manage that and isn't western Japan(60 hz 100 volts) have incompatible power from eastern Japan( 50 hz 100 volts)? Is there going to be a unified grid so all the electronics are the same? Who is going to manage the grid, a company like the former Enron, or a government agency? Is there going to be a electric power exchange to buy and sell power? Who is responsible for the stepdown stations? More questions than answers.

I think privatizing would be the only way to secure electricity services, especially in the TEPCO region. TEPCO is broke and up to their eye balls in debt and will only be increasing tariffs to compensate for it. However, TEPCO is now 51% owned by the government, so they are not gonna let it fail. If they do go ahead and privatize power you can bet there will be governmental clauses to make sure that the gov and TEPCO get a large slice of the action.

Privatisation of power means competition. And in any competition you have winners and losers. The losers are the consumers, the winners the electricity companies. In some western countries where power has been privatised power for some is a luxury and others just can no longer afford it. Britain is a good example where prices are spiralling out of control and are forecasted to rise steeply over the next four years to be double what they currently are. Never, ever believe the mantra that healthy competition will lower prices. It is a lie.

@Spanki, Get Real and SimondB

To paraphrase Bastiat, there is what is seen and what is not seen. What you don't pay through your energy bill ( because of government price control), you will pay through your taxes. The best way to avoid unfair monopolies or cartels is to allow for full and unrestricted competition (which is far from the situation in "some western countries").

I hope that the energy sector here does not go the way it has in Britain.

Is this because energy costs in Britain are approximately half what they are in Japan?

https://www.gov.uk/government/statistical-data-sets/international-domestic-energy-prices

Experience tells us that in any given market you need a minimum of three to four competitors in order to create an efficient market with corresponding lower prices for the consumer. For infrastructure like the power grid, this means you have to create the administrative basis (building law, rights of way etc.) that several companies can build the necessary transmission networks in parallel. If you cannot do this or do not want to do this, then nationalization is more efficient macroeconomically.

Wow some of the comments here are really shocking. I guess people opposing privatisation have no experience of how bad things were in Britain in the past. The reason energy prices are up is due to government imposed regulations around green power etc.

ka chan, my questions exactly. Japan really needs to get it together, voltwise.

Before privatization you need a strong and planned to enforce anti-trust law! Because I can already smell the cartels being established.

@Guillaume

"There is no free lunch. If the consumer does not pay the full price, then the taxpayer will."

The problem is the taxpayer has always paid for utilities and they worked just fine before being privatised. Now that utilities are fully privatised, where does the excess taxpayer money go? Does it end up on beneficial projects for the taxpayers? Do we see an increase in public services or their quality?

The answer is NO, on the contrary. The quality of services goes down. So in essence the extra "freed" public money ends up in the pockets of the politicians. Well done.