What will control on electricity exchange data do to competition?

Japan will limit the flow of some electricity trading information from the power exchange to Tokyo Electric Power and eight other regional utilities to stop companies from checking up on their rivals' sales.

The Trade Ministry instructed the Japan Electric Power Exchange to make alterations to the way data is given by its electronic trading system, Keiichi Hohki, the exchange's director general, said. Utilities will no longer have access to information on the volume and timing of power sales by rivals including new market entrants based in other regions, he said.

Japan has loosened regulation of its power industry, permitting companies to sell electricity beyond original geographic limits. The government is apprehensive that utilities may use information on their competitors' sales to gain an upper hand as they seek customers in other parts of the country.

“We'll complete a revamp of our system by the end of this month,” Hohki said. “In future, a utility will receive only data that is needed for power distribution services in its own region.”

The wholesale power exchange in Tokyo allows utilities and new market entrants such as Nippon Oil and Merrill Lynch & Co. to trade 1,000 kilowatt-hour lots of electricity for delivery the next day, or even as far ahead as a year. The exchange started trading in April 2005.

Japan deregulated electricity wholesaling in 1995, and started easing up the retail market in 2000. About 63 percent of the retail power market is now open to competition.

The country's electricity companies operate both generation and distribution through their power line networks. Their access to rivals' sales information has underlined to debate in the country on whether ownership of power transmission infrastructure should be divorced from the utilities to ensure fair trade. The law prohibits utilities from using information on electricity trading for any other purposes than planning their own transmission.

In the light of the myriad of power plant scandals in Japan, the move to restrict the flow of electricity trading information seems wise on the government’s part to foster lawful competition in Japan. However, things could go the other way. The sudden loss of critical information may cause the power utilities to resort to other ways to fight the competition, and this dog-eat-dog rivalry may very well hamper the government’s efforts to deregulate the market. Will fair trade be enforced with the new rule? Will ownership of power transmission structure be separated from utilities with this new move? Your thoughts.