Saturday, October 12, 2013

Chubu Electric Invades the TEPCO Region; Others to Follow

Chubu Electric recently acquired Mitsubishi Corporation's Diamond Power subsidiary and began selling power in the Kanto region -- on TEPCO's home turf -- effective October 1, 2013.  Kansai Electric plans to start selling power in the TEPCO region from Spring of 2014.  Thus, the gentlemen's understanding that the big regional utilities not compete in each other's home turf ... is broken.  Pandora's box is opened.  Or as Nikkei quoted a Hitotsubashi University Professor, Chubu Electric has "crossed the Rubicon."

On the first day of operation as a Chubu Electric affiliate, 48 wholesale customers switched from TEPCO to Diamond Power.

Chubu Electric has only a 10% reliance upon nuclear generation, and so will face less of a nuclear "ball and chain" than the other utilities.  Further, its service area is adjacent to Tokyo geographically.  And it has already announced plans for 2 large thermal generating plants in the TEPCO region, one in eastern Shizuoka with Mitsubishi Corporation and Nippon Paper, and the other in Ibaraki with TEPCO.   On the other hand, Chubu Electric's home region is just over the dividing line in 60 Hz West Japan, so it cannot readily sell power into the 50 Hz TEPCO region in large volume.

Will competition spread to other parts of Japan, or will the gentlemens' agreement survive elsewhere?

If this is really TEPCO vs the rest of the utilities, then why wouldn't a restructured TEPCO eventually attempt to sell power in other areas of Japan?

Why doesn't Chubu Electric launch a business in Kansai Electric's home territory?  Kansai Electric has the HIGHEST degree of nuclear dependence among the major utilities, its territory is also adjacent (to the west) of Chubu, and there is no 50 Hz/60 Hz problem.

Time will tell.


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