Abstract
This paper describes the present status of competition in the electric utility industry in Japan and the present transmission pricing system. Under the amended Electricity Utility Industry Law of 1995, the electric utility industry was categorized into the 3 types: ‘general’, ‘wholesale’, and ‘special supply’ utilities. This paper also summarizes the first competitive bidding from independent power producers (IPPs) and the evaluation of demand site proximity in the bid process. In 1996 the major utilities published wholesale wheeling price lists for IPPs. Although wholesale wheeling prices are similar to the megawatt-mile (MW-mile) approach, the trunk transmission line cost and the average local transmission cost are treated separately. The present study reviews the present wheeling price system in Japan from the principles of transmission pricing established for short-term and long-term efficiency and implementation. Finally, we propose a 2 -part tariff on transmission services for IPPs. Capacity cost should be allocated by a modified usage method. Operating cost including line losses should be allocated by a marginal or incremental method. We further propose the application of the cooperative game theory to the cost allocation problem.
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