Only 5.5% of households switched to new electricity suppliers after Japan’s retail power market was liberalized in April 2016, industry data shows, leaving the big utilities relatively unscathed.
The ratio was higher in urban regions where competition is stiffer, with more consumers choosing to ditch traditional power companies for new entrants or competing utilities.
In the Tokyo metropolitan area, 1.81 million customers, or 7.9%, abandoned Japan’s biggest utility Tepco. This was also the highest ratio to switch of all regions. While many of the customers went to new entrants, some 700,000 of Tepco’s customers switched to Tokyo Gas Co. for their electricity.
In and around Osaka Prefecture, about 720,000 households, or 7.2% of the total, dropped Kansai Electric Power Co. for another utility.
In other regions, the defection ratios were lower at about one to two percent. These include the areas served by Tohoku Electric Power Co. Hokuriku Electric Power Co., Chugoku Electric Power Co. and Shikoku Electric Power Co.
The competition has had little impact on prices so far. “Competition is unlikely to intensify very much over the coming year or two, except in some of the big-city areas,” S&P Global Ratings Japan Inc. analyst Hiroki Shibata told The Japan Times. “Prices are unlikely to fall markedly.”
New entrants procure electricity mainly from other companies because they do not have large-scale power plants. The Japan Times reported that there had been calls for a more active wholesale electricity market, which would enable industry players to buy power at lower costs, helping to more effectively enhance competition and drive down prices.