No.117 Agreement for the Establishment of a New Municipal Power Company

On August 25, 2021, the City of Inagi and Pacific Power Co., Ltd. concluded an agreement for the joint consideration of a regional energy project by the (tentative name) Inagi City New Power Company.

This agreement is for the joint consideration of establishing a "Municipal New Power Company" to procure and supply renewable energy, etc., towards achieving carbon neutrality by 2050.

Previously, electricity was supplied by major power companies that were regional monopolies known as "General Electric Business Operators," but from March 2000, retail liberalization was gradually implemented, and full retail liberalization was enacted on April 1, 2016.

With this deregulation, companies that have newly entered the market are referred to as "new power companies," which are specific-scale electricity business operators (PPS: Power Producer and Supplier), and currently, 730 business operators are registered.

The current power supply system is divided into power generation operators, transmission and distribution operators, and retail electricity operators, with new power companies falling under the category of retail electricity operators.

New power companies purchase electricity from power generation operators and the Japan Electric Power Exchange (JEPX), or generate electricity using their own power generation facilities, and sell it to consumers (demanders). However, since they do not own transmission and distribution facilities, they pay a usage fee called transmission charge to utilize the transmission network of transmission and distribution operators to deliver electricity to demanders.

The series of electricity deregulations aims to introduce market competition principles, relax entry regulations for the previously monopolized electricity business, and reduce electricity rates as the primary objective.

Furthermore, due to the accident at the nuclear power plant caused by the Great East Japan Earthquake that occurred afterward, there is also a purpose to encourage the entry of diverse Business Operators to ensure a stable supply of electricity.

Furthermore, it aligns with the goal of promoting the spread of environmentally friendly electricity, not just for economic reasons.

Amid this liberalization, local government-funded regional new power businesses have emerged, and the local new power companies that serve as their main entities have increased to over 50 nationwide. While there is no clear definition of regional new power businesses, they are generally described as "new power businesses conducted by local entities utilizing regional characteristics for the purpose of regional promotion," supplying electricity generated from renewable energy sources such as solar power.

In Inagi City, as part of the fiscal year 2021 projects, the city is considering whether it can establish the (tentative name) Inagi City New Power Company with its investment.

The purpose of this is to effectively utilize the energy resources within the city to reduce carbon dioxide emissions, aim for local production and consumption of energy, and to return the energy resources that were flowing out of the city back to the region, thereby circulating operating profits to promote regional development.

Since fiscal year 2019, we have been conducting study sessions together with Pacific Power Co., Ltd. and have been researching and studying simulations of profitability and other related topics.

And this time, we have concluded an agreement to advance further consideration of feasibility aimed at establishing a company.

At this point, it is not confirmed that the company establishment and business implementation will take place, but if the business becomes a reality, it will be a significant step towards the "realization of a regional circular symbiosis zone" and the "practice of SDGs" that Inagi City is promoting. Therefore, we will continue our efforts towards realization.