Japan to open residential power market to competition

TOKYO (REUTERS) - Japan passed a law on Wednesday opening up the residential market for electricity to full competition, the latest stage of the biggest shakeup in the power industry's history that was set in motion following the Fukushima nuclear disaster.

The reforms, which may end with the break-up of powerful regional monopolies, are central to Prime Minister Shinzo Abe's drive to overhaul the economy, as high energy costs weigh on government finances. Regional monopolies like Tokyo Electric Power Co and Kansai Electric Power Co supply nearly all of Japan's electricity and current laws allow only them to supply power to residential and small business users.

The bill, which opens up the market for smaller power suppliers, was passed in the Upper House on Wednesday after receiving 211 votes in favour and 26 against, a parliamentary official said by phone.

The Lower House approved the legislation last month. A bill passed in November allows for the establishment of a national grid operating company in 2015 to allow all suppliers equal access.

The final phase requires regional monopolies to spin off transmission and distribution operations into separate entities by 2020. The monopolies were set up in 1951 during the American occupation after World War Two and followed the US model at the time, with regional utilities controlling all aspects of generation and transmission.

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