Govt wants roundtable discussions on reorganising the power industry

January 3, 2017

Gov't mulls 'roundtable' meetings to spur power industry reorganization

http://mainichi.jp/english/articles/20170103/p2a/00m/0na/012000c

The Economy, Trade and Industry Ministry is considering holding "roundtable" discussions with top executives of major power companies on measures to restructure their business ties with beleaguered Tokyo Electric Power Co. (TEPCO) and set up operations overseas, it has been learned.

The industry ministry wants to help pave the way for the power industry to restructure and consolidate by setting up a forum in which major utilities can exchange views on the realities of domestic and overseas markets as well as management reforms. The move will effectively have the government play mediator in the reorganization of the power industry.

The move comes after a ministry expert committee on reforming TEPCO and issues related to the tsunami-hit Fukushima No. 1 nuclear plant proposed on Dec. 20 that the government play a "catalytic" role in the realignment of the power industry. In response, TEPCO plans to hash out a new management restructuring plan this month or later. The roundtable is expected to be set up around the time that TEPCO comes up with its new restructuring scheme.

One of the expert panel's proposals is for TEPCO to establish a "consortium" with other utilities on its power transmission and nuclear power projects at an early date. The proposal is intended to facilitate the realignment and consolidation of the power industry as part of moves to rationalize TEPCO's measures to cover the costs of dealing with the Fukushima nuclear accident. The expert panel projected that these costs would swell to 21.5 trillion yen from an earlier estimate of 11 trillion yen. The proposal also draws on TEPCO's plan to move its thermal power business to JERA Co., a joint venture with Chubu Electric Power Co.

The industry ministry is considering plans including publicly soliciting prospective partners for TEPCO. However, major power companies remain cautious, with a senior official at one major utility saying, "Our own company's profits will be used to deal with the nuclear accident." The utility roundtable meeting is the industry ministry's attempt to help resolve this and other issue. The roundtable idea is also in line with the TEPCO's opinion that "as long as TEPCO is aiming to reorganize at a national level, we want to have an opportunity for all companies to meet and discuss things," as a TEPCO executive said.

While domestic power demand has stagnated due to energy-saving efforts and the declining birthrate, the industry is faced with a shifting market overseas, where demand continues to rise. According to an International Energy Agency (IEA) forecast, while Japan's domestic electricity consumption will rise only slightly from 950 billion kilowatt-hours in 2014 to 980 billion kilowatt-hours in 2030, overall global consumption will rise from 19.8 trillion kilowatt-hours to 27.9 trillion kilowatt-hours.

Through the roundtable, the industry ministry is keen to help boost utilities' entry into overseas markets by facilitating industry rationalization to strengthen their businesses at home. However, as the power industry may not respond well to having reorganization foisted on it by the government, the ministry plans to flesh out the scheme carefully. As a senior utility official said, "It is essential to set up a contact point for private entities first and leave the matter to them thereafter."