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Business

Wielding discounts, new power providers battle for households

TOKYO -- Newcomers to the business of selling electricity to Japanese homes are jockeying for position in an 8 trillion yen ($67 billion) market ahead of full deregulation in April.

     A wide-open market will mean the end of the virtual monopolies held by Tokyo Electric Power Co., or Tepco, and other regional electric utilities.

     Phones began ringing nonstop at Tokyo Gas' call center here at 9 a.m. Monday. But most of the inquiries were about new residential power contracts, not gas. The natural gas supplier received about 300 inquiries in just two and a half hours on this the first day of sign-ups. It aims to capture a tenth of demand in the greater Tokyo area by 2020.

     Tokyo Gas will supply households from its own gas-fired power plants. A family of three living in a detached home that bundles its electric and gas services can save 4,000 yen to 5,000 yen a year, or 4-5%, compared with buying power from Tepco, according to Tokyo Gas. The more electricity that households combining their services use, the greater the savings.

     And Tokyo Gas has more bundles to offer. It will offer packages that include Internet connections and reward points program tie-ins, working with 12 companies, such as NTT Communications and Rakuten. Customers choosing such multiservice bundles could save more than 20,000 yen a year.

     Osaka Gas began offering electric and gas bundles to households on Monday in its home region of Kansai. Customers choosing two-year contracts receive bigger discounts.

     Oil refiner TonenGeneral Sekiyu started signing up households for a newly announced electric service plan that claims to be 3-6% cheaper than buying from Tepco. Like Tokyo Gas' bundles, the discount grows with usage.

     TonenGeneral will work with about 30 liquefied petroleum gas distributors, which serve many suburban and rural households, to extend its residential power marketing beyond its gasoline stations. It may offer bigger discounts to customers that bundle their LPG and electric services. From April, it will move into the service regions of Kansai Electric Power and Nagoya-based Chubu Electric Power.

     TonenGeneral will sell electricity generated at its power plant in Kawasaki, outside of Tokyo, as well as from outside providers. It plans to build large conventional power plants in Chiba and Shizuoka prefectures, aiming to sign up several hundred thousand customers within two to three years.

     Tokyu Power Supply, an affiliate of railway and retail group Tokyu, seeks to make electricity customers of cable television subscribers. A family of four in a detached home combining their Tokyu group cable, power and credit card payment services can save nearly 10,000 yen a year, according to the company.

     The regional electric utilities are readying to counter this new competition.

      "We must not be defeated," Tepco President Naomi Hirose told employees in a New Year's address Monday, promising new service plans and more energetic marketing. The discount Hirose mentioned, to be unveiled later this month, will amount to about 5% and apply to high-usage households. Kansai Electric is also readying discounts.

      But Japanese households, which pay about twice as much for electricity as those in the U.S. or South Korea, will likely want more than a few percent shaved off their monthly bills. If new power providers fail to make headway in the deregulated market, electric rates may soar as in Britain, where they doubled from 2004 to 2013. The Japanese government has a role to play in ensuring a competitive environment.

(Nikkei) 

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