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Published byMerryl Megan Wheeler Modified over 8 years ago
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DEREGULATION OF THE ELECTRIC POWER INDUSTRY Teruaki Masumoto Executive Vice President Tokyo Electric Power Company
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1.The Position of Electricity Market Liberalization in the Larger Scheme of Things 2.Lessons from California 3.Which Way Forward?
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1.The Position of Electricity Market Liberalization in the Larger Scheme of Things
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Trend in the Electric Power Industry Privatization of state-run utilities Break-up of regional utility monopolies Introduction of market-based competition
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Electric Power Companies in Japan
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Deregulation in Japan Independent Power Producer (IPP) system, 1996 Opening up of transmission networks, 1996 Competition - March, 2000 - minimum 2,000 kW/ 2000 volts and above
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Subsequent Areas for Consideration Expanding deregulation to other segments Separating power generation, transmission, and distribution Introducing a pool system
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2. Lessons from California
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Electricity = Lifeblood Sudden rate rises can have devastating effects on the consumers and the functioning of society. As a market product, rates are naturally going to fluctuate. Users cannot hedge against shortfall risk by stockpiling.
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Transmission Capacity Congestion ↓ Rising utilization prices ↓ Investment = Solution ↑ Not enough investors showed up in CA
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Who Takes Responsibility? Power generators The Independent System Operator (ISO) Distributors Investors
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Japanese Power Sector in the Past (1) ・ Before WWII : Many small electric power companies were involved in reckless and exhausting competition. ↓ ・ Competition went too far and led to market oligopoly.
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Japanese Power Sector in the Past ( 2 ) ・ 1939-51: “Horizontal” integration model since the beginning of World War II - Nihon Hassoden (generation + transmission) → State-owned corporation - 9 utilities (distribution) → Privately-owned corporations
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3. Which Way Forward?
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Challenge Competition Assuring supply of electrical power Goal: to provide reliable, low-cost, stable supply of electric power
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