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Business

Osaka Gas enlists Docomo for home power sales

OSAKA -- Local utility Osaka Gas will join wireless carrier NTT Docomo to sell bundled electric and telecom services to homes starting as soon as the fiscal year beginning in April.

Osaka Gas' mainstay Senboku power plant.

     The partners seek to beat Osaka-region power provider Kansai Electric Power's rates by an initial 5% or so and may go even lower eventually. 

     Docomo has some 9.3 million subscribers in the Kansai region, which includes Osaka, providing a ready-made marketing target.

     Osaka Gas is also negotiating with Docomo rival SoftBank Group, Nippon Telegraph & Telephone fixed-line unit NTT West and cable television provider Jupiter Telecommunications as potential partners in similar tie-ups. It plans to choose allies by April, when the residential sale of electricity becomes fully deregulated.

     Osaka Gas aims to sign up 200,000 households for service bundles in the first year and to be supplying electricity to 10% of its natural gas customers -- 700,000 households -- by 2020.

     Supplying residential power is a relatively profitable business that Osaka Gas is eager to take up. It has some 1.8 million kilowatts of generating capacity that will rise to 1.95 million next year after a new coal-fired plant and other facilities come onstream. That is the equivalent of two nuclear reactors' worth of power, giving it one of the biggest generating capacities in Japan, barring the regional electric utilities.

     Looking beyond households, Osaka Gas will market a different kind of bundle -- electricity and piped-in music. Its partner in this venture will be Usen, a major name in background music that has carved out a niche among restaurants and other small businesses. The company has some 200,000 subscribers in the Osaka and Nagoya regions.

     Osaka Gas' mainstay business is languishing -- gas sales fell 1.5% on the year in the six months through September. Deregulation of residential gas sales looms in 2017, prompting the company to diversify.

Mixing it up

Such partnerships between utilities and outsiders to the business of selling electricity are coming thick and fast ahead of April's milestone in deregulation. Most see the main battlegrounds as metropolitan areas, such as Kansai and the Kanto region, which includes Tokyo.

     Tokyo Electric Power got off to an early start in this regard. It is readying to sell bundled power and telecom services with SoftBank, as well as power-and-gas and other bundles with Nippon Gas, Tokai Holdings and others. Kansai Electric is planning to team up with telecom group KDDI.

     All this alliance-building partly reflects the nature of the business.

    "Electricity has no color or shape, so you add value by combining it with something else," a senior Tepco executive says.

     Tepco and its peers command vast distribution networks, but having operated as virtual monopolies for decades, they lack strong sales forces. Enlisting partners can bolster their ranks on this front.

     Independent power providers are also forming cross-sectoral partnerships. JX Holdings unit JX Nippon Oil & Energy, a power supplier in its own right, will team up with electronics retailer Nojima.

(Nikkei)

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