Abstract

The Federation of Electric Power Companies (FEPC) of Japan has long been releasing the detailed financial statements of their member corporations (on their website). We have analyzed the transition of Japan's electric power policy through the business structure of the electric power industry using the FEPC financial data over 53 years. Thus, we have clarified the problems and distortions built into the power industry by Japan's power policy as stated in the following: (1) During the regulation period, the dual-price mechanism for the industrial use and the home-use sectors had been effectuated, where (2) the former shared two thirds of the power demand but yielded only small profits or even losses; and the latter, sharing only one third of the demand, yielded nearly all of the industry's profits; however, (3) since the start of complete retail deregulation, this dual-price mechanism has come to suffer paralysis and the power majors began a cutthroat competition, which now seems to result in diminution of profitability in the home-use sector (the industry's former treasure box). This price-cutting war is considered very dangerous for the sustainability of this industry because this business is highly equipment-intensive and is severely vulnerable to any revenue instability. Meanwhile, declining demand due to the declining population is inevitable, and the power infrastructure will become excessively capacitive against demand. At the policy level of the government, recognition to this is overwhelmingly short. There is a possibility that the most powerful risk of both the electric power industries and social economy will be the way of the electric power policy that leads electricity demand from the expected growth rate and prepares the power supply configuration based on it.

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