| TOKYO, Sept 15
TOKYO, Sept 15 The Fukushima nuclear disaster is
driving one of Japan's biggest industry overhauls since World
War Two, as new, nimble suppliers take business from the big
regional power monopolies, and manufacturers, from steelmakers
to drinks firms, generate their own power and sell what they
The 10 powerful regional utilities, which still supply
around 90 percent of Japan's electricity - even with the
country's nuclear industry virtually idled since the 2011
disaster - are expected to be broken up into
separate power generation and distribution companies anyway by
But the world's worst atomic crisis in a quarter of a
century has accelerated the pace of market reforms, as a growing
number of firms armed with new technologies, flexible payment
options and, often, cheaper power invade traditional markets.
Tokyo Electric Power Co (Tepco), the operator of
the Fukushima facility, and the other major utilities have lost
thousands of accounts in the 30 months since the plant was
crippled by a massive earthquake and tsunami, as businesses
switch to cheaper alternatives, a Reuters survey shows.
"Until recently, everyone just assumed that if you put a
plug in a socket electricity would come out. Most people had no
idea of the structures behind that," said Hiroaki Ikebe,
president of Ennet Corp, Japan's biggest independent electricity
supplier. But the Fukushima disaster, he said, prompted people
to ask how the power supply system works, how fees are
calculated, what services are available, and how this compares
with other countries.
While the big utilities still dominate the market, Fukushima
exposed shortcomings in power distribution, and the increasing
competition is likely to push prices lower and shrink their
With energy companies' public image shredded in the wake of
the Fukushima crisis, the government is to press on with opening
up the market and reducing some of the highest electricity costs
in the world. But change won't be easy as the utilities are
politically well-connected and have resisted liberalisation
attempts since the 1990s.
The reforms, set to go to parliament when it resumes next
month, aim to create a national grid company in 2015, and break
up the monopolies into generation and transmission firms by
2020, and abolish price controls.
Ennet has doubled its customer base to 15,000 in two years
by offering cheaper prices and more flexible contracts,
overtaking Japan's smallest monopoly, Okinawa Electric Power Co
, in terms of electricity supplied, Ikebe said.
The independents not only undercut the monopolies by
accepting lower profit margins, they also provide power
management systems and flexible buying plans to reduce prices
and save energy. Many also trade electricity and use plant and
infrastructure paid for by other firms, so they don't have to
recoup those costs.
Tepco, Kansai Electric Power Co, Chubu Electric
Power Co and the other regional monopolies have lost
close to 18,000 customers since around the time of the Fukushima
disaster, figures provided by the companies to Reuters show.
"We assume customers with smaller demand are likely to
switch to the new electric power companies," said Naoko Iguchi,
a spokeswoman at Kyushu Electric, which lost 340 accounts in
April-June - more than double the number in the previous 12
months - as it raised tariffs to cover higher fuel costs while
its nuclear reactors are shut down.
Tepco has been hardest hit, losing 11,550 customers as it
raised its prices by 10-17 percent. That's more than half the
number of accounts it has lost since 2000, when Japan last tried
to open up the market to competition. With its only remaining
viable nuclear plant - the Kashiwazaki Kariwa facility in
Niigata prefecture - still shut, Tepco has said it may have to
increase prices again to bolster its finances. The utility has
racked up net losses of $27.4 billion since the Fukushima crisis
30 months ago.
A spokesman said Tepco offers energy savings plans to try to
stop defections from its almost 29 million customers.
Chubu Electric last month broke an unwritten rule among
utilities not to stray onto each others' turf by buying control
of Diamond Power Corp, a Tokyo-based independent electricity
supplier. Chubu Electric, Mitsubishi Corp
, the seller of the Diamond Power stake, and Nippon
Paper Industries Co will also build a coal-fired power
station near Tokyo to supply Diamond Power.
Nippon Paper, Japan's No. 2 paper producer by sales, is also
branching out on its own. It registered last year to be an
independent electricity supplier to sell excess in-house
generated power, spokesman Koji Yoshino said, and plans to build
power generation facilities in its factories around Japan,
including a 110 MW coal-fired plant in Miyagi prefecture, north
of Tokyo. The company has used biomass and solar power in three
other locations, Yoshino said.
Others have followed suit, with more than 100 companies
registering with the government as of Friday to become power
producers and suppliers. Manufacturers and others are also
setting up in-house generators to produce electricity and cut
costs as the big regional utilities hike prices - further eating
into the monopolies' market share.
"We realise competition is going to get fierce," said a
spokesman at Kansai Electric, which this year raised its prices
by almost 10 percent, and lost 1,050 customers in May-July.
The number of locations licensed to generate 1 MW or more of
in-house power rose 4.6 percent to 3,346 in the year to
end-March 31, industry ministry figures show, with manufacturers
from steelmakers to drinks firms getting in on the act.
Asahi Group Holdings Ltd, Japan's second-biggest
beverage maker by sales, spent about 1 billion yen ($10
million)to add a 7.8 MW gas co-generation unit at its Ibaraki
brewery - inside Tepco's service area - that started in July.
That, and other energy saving measures, will allow it to cut
peak-time energy use across its eight breweries by about 40
percent compared to last summer, Asahi said.
Kobe Steel Ltd, which generates power at its
factories using blast furnace gas as fuel, has bigger plans.
Japan's No. 3 steelmaker aims to build Japan's biggest inland
thermal power plant north of Tokyo, a 1,400 MW gas-fired
station. The facility will be supplied by gas from an expanded
network planned by Tokyo Gas Co, Japan's biggest city
gas supplier and one of three shareholders of Ennet. The others
are Osaka Gas Co and a unit of NTT Facilities Inc.
($1 = 100.4250 Japanese yen)
(Additional reporting by James Topham, Osamu Tsukimori, Leng
Cheng and Guo Cheng; Editing by Ian Geoghegan)