Electricity and Gas MarketSurveillance Commission
May 2024

WHO ARE WE？
⚫ The Electricity and Gas Market Surveillance Commission (EGC) was establishedin September 2015 in order to urge sound competition in the electricity market.
⚫ Besides strictly monitoring transactions in the market, EGC makes
recommendations to the Minister on necessary rule-making.
①Monitoring/Inspection◆ Consumer protection
ex. Demanding extremely high cancellation fee◆ Prevention of monopolistic power
ex. Setting extremely low retail price to block new entrants◆ Neutrality of transmission operators
ex. Leaking the information of other generators/retailers obtained through thetransmission operation to the generation/retail sections in the company/group②Assessment of the registration of new retailers③Assessment of the application of tariffs④Policy Recommendation◆ Rule-making from the viewpoint of competition as well as consumer protection* Rule-making on securing stable supply under jurisdiction of ANRE
2

Electricity and Gas Market Surveillance Commission Operation Philosophy

Energy System that the Commission aims for（Mission）
Providing low-cost, stable, and diverse energy to all customers through fairand diverse business opportunities for all businesses.
As a result of both consumers and suppliers taking proactive and rational action through the appropriate use of market
mechanisms, efficient and robust electricity and gas systems are built that are economical, stable, and environmentallycompatible over the medium to long term.
These will enrich people's lives, strengthen the competitiveness and international reach of the energy industry, and leadto sound and sustainable development.

The Commission’s vision for organization
Protecting confidence in themarket• Remedy behavior that
undermines confidence• Protect consumers' interests• Dialogue with the market,
accurate information

Utilization of market mechanism

Ensure appropriateness of Network• Clarify issues, propose and implement
measures to ensure that markets andsystems function consistently as awhole with a view to the ideal futuresystems.

• Ensure neutrality, fairness, andefficiency in network where is a regionalmonopoly• Improvement of performance andservice levels with the emerging newtechnologies

The values that the Commission focuses on
Independence
and expertise
Focus on theorigins as anindependent
professionalorganization

Transparent
operation
Emphasizetransparency
and proactively
publish data
used fordecision-making

Essence and gfuture-oriented
See the overall
structure froman overhead
perspective, andexamine issues

Data-driven
Collect a wide
range of data,
analyze themand do not
overlook any
information.

Effective Action To a higher level
Promptly clarify
the facts of theproblem and takefirm action inaccordance withthe rules.

Aiming for higher
goals bygathering anddisseminating
information with
global trends andfuture visions.

Role of the Commission
Ministry of Economy, Trade and Industry
Measures basedon comments
provided by theCommission
Guidance andsupervisionRegional Bureaus ofEconomy, Trade andIndustry, etc.
Market Surveillance
OfficeMinister of Economy,
Trade and Industry
Comments,
Propositions

Report[1] Development of rules[2] Disposition of utilities[3] Approval, etc. for general supply
provisions

Electricity and Gas MarketSurveillance Commission
To ensure fair trade ofelectricity, gas and heat
To ensure neutrality of network
sectors (implementation ofactivity regulation)

Application of rules on trade surveillance andactivity regulation, etc.

(collection of reports, on-the-spot inspections, recommendation
to utility, mediation/arbitration and so on)Electricity, gas and heat market(electricity generation utility, electricity transmission and distribution utility, electricity retailer, gas production utility,gas pipeline service provider, gas retailer, heat supply utility and so on)4Achievements thus far (As of December, 2023)
１．Strict Monitoring of Transactions

２．Recommendation of New Rules, etc.

① Monitoring for improper actions① Creating rules to promote competition and protect
consumers•

Business improvement orders, recommendations
for business improvement, collection of reports,
on-site inspection in information leakage cases
between retail companies and transmission
companies.

•Collection of reports in cases where utilities form
cartels.

② Examination of fees, etc.
••New Network Tariff Regulation called ”RevenueCap” has been introduced. EGC reviewed
intensively the new network tariff.
Examination of retail regulated electricity tariff forhouseholds submitted by 7 out of ten major
utilities.

Rules proposed to the Minister of Economy, Trade andIndustry•
Revision of the “Balancing Market Guideline”.
•Revision of the Guidelines for Proper Electric Power Trade•
Institutional measures concerning information leakage
incidents by general transmission and distribution
companies② Public relations & consumer protection initiatives•Call for attention for misleading websites•

Creation of public relations material for Revenue Cap

3．Deeping of International Cooperation• Promote exchange and knowledge sharing with theregulatory authorities of other countries

Major Meeting Name

３. Record ofcommittees, etc.
held(From September 2015)

Times Held

Electricity and Gas Market Surveillance Commission

507

Meeting for System Design

96

Meeting for Fee System Technical Meeting55

３（Supplementary Materials）

Power Grid in Japan⚫ 10 vertically integrated power companies dominated the electricity market in Japan.
⚫ The market is divided into two by different frequencies.
⚫ In the context of potential risks of large-scale disasters as well as increasing demands fordecarbonization, it is essential to drastically enhance the resilience of electric power networks inJapan.

West

Hokkaido
4GW

60Hz( same as U.S.)↑0.9GW↓0.9GW→4.6GW←2.8GW↑2.4GW↓0.2GW

Chugoku
10GW

Kyushu15GW
Okinawa
2GW↑1.2GW↓1.2GW→1.5GW←1.9GW

Kansai27GW↑1.4GW↓1.4GW

Hokuriku
5GW→2.5GW←1.2GW↑0.3GW↓0.3GW

Chubu
25GW

Shikoku
5GW* The figures above indicates the maximum electricity demand in 2022.

Tohoku13GW

Frequency
Conversion→2.1GW←2.1GW↑2.4GW↓5.1GWTokyo
54GW

East50Hz( same as EU)
7

History of System Reform in the Electricity Market in Japan⚫ METI has been advancing system reforms in the Electricity Market in Japan, such as theintroduction of competition to the wholesale market and the expansion of retail customer
choice, since 1995.
1st System Reform: 1995
✓ IPP and bidding system for General Electric Utility (GEU)✓ Customer choice menu in GEU

2nd System Reform: 1999
✓ Retail choice for special high voltage customers (Over 2000 kW)✓ Expansion of flexibility for GEU’s retail menu at reduction
California Electricity
Crisis in 2000

3 rd System Reform: 2003
✓ Expansion of retail choice to high voltage customer (Over 50kW)✓ Establishment of the wholesale market and ESCJ
4 th System Reform: 2008

Great East Japan Earthquake andFukushima Daiichi Accident in 2011

✓ Establishment of hourly ahead wholesale market✓ Introduction of stock taking method in network tariff
5 th System Reform: 2015✓ Establishment of OCCTO and EMSC/METI✓ Full retail choice (From April 2016)✓ Legal Unbundling from 20208

Japan’s Electricity related Markets⚫ JEPX established Day-ahead Market and Forward Market in 2005, and Hour-ahead Market in 2009.
⚫ Methodical, systematic introduction of nation-wide Balancing Market started in 2021.
⚫ The introduction of capacity market system was decided in 2017 and the first auction was held for
FY2024 in FY2020.

9Electricity Retail Market Liberalization in Japan⚫

Retail market gradually liberalized since 2000.

⚫

Full market liberalization completed in 2016.

【2,000kW】

User Types

2000-Large
Factories

26%

2004-

2005-

40%

Mid-sized
Factories

62%【500kW】
Small Factories
and Buildings【50kW】

2016-

Full Market
Liberalization

74%
60%

Small Shops,Households

38%※※Regulated retail tariffs will remain until the end of transitional measures. 10Long-term Vision of Cross-regional Network Development⚫ In March 2023, the Organization for Cross-regional Coordination of Transmission Operators(OCCTO) formulated the “long-term vision of cross-regional network development” as a long-termvision to introduce mass renewable energy and strengthen resilience. It aims to achieve carbon
neutrality in 2050.
⚫ It shows that approximately 7 trillion-yen of investments will be necessary according to their basescenario based on the cost-benefit analysis.
Base scenario

Necessary investment
6-7 trillion yen【Explanatory note】(Source) OCCTO HP

Gird reinforcement
Internal reinforcement
Future options

11