Japan Approves Final Set Of Power Market Reforms

On June 17, 2015, the Japanese Diet passed a bill amending the Electricity Business Act (the "Amendments") as the third and final stage of the electric power system reforms that began following the Great East Japan Earthquake of March 11, 2011. The Amendments will become effective as of April 1, 2020. They require that Japanese power companies operate their electricity transmission and distribution business separately from their electricity generation and retail businesses. In order to comply with the Amendments, power companies will be required to spin off their existing transmission and distribution business into separate entities. This Commentary provides an overview of the key features of the Amendments as well as background on the earlier stages of the reforms to Japan's electric power system.