Comparing and Contrasting Electricity Supply and Use in the United States and Japan

Abstract

SINCE World War II, the US and Japan have had great economic success. Combined, they now produce about thirty percent of the Gross National Product of the western world. The electric power industry in each country plays an important role in both economies. Electricity is used as the major energy input and investments in and payments for electric power are important components of the GNP.The electric utility industries of the US and Japan have many similarities. For example, the shares of the electricity capacity owned by the privately-owned utilities in each county is very high; 76.9 percent in the US (1987) and 76.2 percent in Japan (1986). Nuclear power plants have been developed by the privately-owned utilities in each country. In other developed countries, publicly-owned electric utilities are responsible for the largest share of capacity.There exist several differences between the US and Japanese electric industries. Electricity use per capita in the US is twice that in Japan. The Japanese average electricity rate is 21.93 Yen per KWH (13.01 Cents per KWH on the 1986 exchange rate basis), about twice that of the US (6.49 cents per KWH). Moreover, while electricity rates of the US have been rising, the rates in Japan began to decline in 1982 in both real and Yen terms. In addition, electricity in the US is produced mainly from coal, but in Japan it is produced from a mix of oil, gas, and nuclear generating stations. These differences are attributable to the different regulatory and economic environments.A significant feature of the current US regulatory environment is the Public Utility Regulatory Policy Act of 1978 (PURPA). This act establishes a cogeneration market by requiring electric utilities to purchase all the power generated by qualified cogeneration facilities. Nonetheless, in Japan, self-generation and cogeneration account for 10 percent of total electricity supply, while in the US these sources accounted for 2.7 percent of total electricity supply in 1981. More importantly, in the industrial market for electricity the relevant percentages are 29.4 and 7.6 for Japan and the US respectively, for the same year. Since 1981, the percentages have probably increased.The purpose of this paper is to analyze the similarities and differences between the US and Japanese electric power industries, focusing patterns of use, patterns of electricty supply, and on cogeneration and selfgeneration trends.