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Electricity market reform in Japan after Fukushima

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This study reviews the status, progress, and policy issues related to the reform of the Japanese electricity market undertaken in response to the disaster at the Fukushima nuclear power plant in March of 2011. The reform has three stages: (1) establishment of a neutral organization of network operation, (2) extension of retail competition to household consumers, and (3) legal unbundling of the transmission-distribution network sector. Currently, the first stage is underway and the Japanese government is preparing to implement the second stage for a fully liberalized retail market. This study employs government and company data to demonstrate the current and projected influences of the stages on numerous aspects of the reform. The results prove that resistance to nuclear power and promotion of renewable energy generation is expected to have a significant impact on consumer benefits, whereas new business alliances are expected to create new competitive energy markets. Periodic assessments of the status and progress of the stages of the reform are vital to achieving an efficient electricity market that benefits providers and consumers.
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JEL Codes:L51: Economics of Regulation, L94: Electric Utilities, Q41: Energy: Demand and Supply; Prices

Keywords: Electricity, market reform, climate change policy, Japan, nuclear power generation

DOI: 10.5547/2160-5890.5.1.mgot

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Published in Volume 5, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.