[Japan] The Japanese Cabinet Decided to Revise the Electricity Business Act to Establish a Robust and Sustainable Electricity Supply System

On February 25, 2020, Japan’s Ministry of Economy, Trade, and Industry (METI) announced that the Cabinet had approved a bill enacting revisions to the Electricity Business Act, the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities, and the Act on the Japan Oil, Gas and Metals National Corporation, Independent Administrative Agency (JOGMEC Act)[1]. The proposed revisions aim to establish a resilient and sustainable electricity supply system. The bill was submitted to the 201st ordinary session of the Parliament.[2]

The bill, which is now pending in the Parliament, requires electricity distribution companies to coordinate on disaster response; establishes a new system supporting the introduction of renewable energy; and adds additional operations at the Japan Oil, Gas and Metals National Corporation (JOGMEC) to enable a stable energy supply. JOGMEC (Headquarters: Tokyo) is a Japanese government Independent Administrative Institution that is responsible for securing a stable supply of nonferrous metals and mineral resources.[3]

Key highlights of the proposed revisions include:

· The revised Electricity Business Act will require distribution and transmission operators to develop a disaster coordination plan and a wide-area grid maintenance plan.

· The modified Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities will require the establishment of a FIP (Feed-in Premium) scheme, which adds a premium to the market price for renewable energy production. The act also imposes external funding obligations on solar power generation companies for disposal costs. Furthermore, the act will ask the Japanese government to establish a system to support the cost of inter-regional transmission lines, which is necessary to expand the introduction of renewable energy.

· The revision of the JOGMEC Act will require the JOGMEC to launch a business to procure liquefied natural gas (LNG) and other fuel for power generation at the request of the Minister of Economy, Trade, and Industry in the event of an emergency. Additionally, in order to diversify LNG suppliers and secure a stable supply of metal minerals, JOGMEC will invest in natural gas transshipment and storage bases and mining businesses.

[1] https://www.meti.go.jp/english/information/data/laws.html

[2] http://www.shugiin.go.jp/internet/itdb_gian.nsf/html/gian/menu.htm

[3] http://www.jogmec.go.jp/about/organization_001.html