Power Firms’ Awareness of Compliance with Law Must Be Questioned

It was a foolish act that hindered fair competition between major electric power companies and new entrants to the market, and it is only natural that the government has taken disciplinary action. The companies need to reflect on this matter and do their utmost to prevent similar incidents from happening again.

The Economy, Trade and Industry Ministry has issued business improvement orders under the Electricity Business Law to five companies, including Kansai Electric Power Co. and Kyushu Electric Power Co. The orders were issued after KEPCO and Kyushu Electric employees unlawfully accessed data such as the addresses and electricity consumption of customers of new entrants — known as power producers and suppliers (PPS) — that is held by transmission and distribution subsidiaries.

The unauthorized access was discovered at seven major electric power companies from last December. KEPCO and Kyushu Electric, which were the most malicious, and three transmission and distribution companies that leaked customer data were the subject of business improvement orders.

METI is requiring that the five companies submit business improvement plans. The firms must present effective measures to prevent recurrence, including shutting down access to systems.

Power transmission and distribution companies are responsible for delivering electricity from power plants to customers.

The PPS that entered the market with the deregulation of the electric power industry do not have their own power grids. Because they have no choice but to rely on the power grids of major companies, the power transmission and distribution divisions had been separated from the major power companies to ensure that new power companies are not treated unfavorably.

Meanwhile, transmission and distribution companies are tasked with managing the customer data of the PPS. For this reason, the law prohibits the sharing of customer data between the transmission and distribution companies and the retail division of the parent companies. Unauthorized viewing in disregard of this restriction is an act that undermines the very foundation of the business deregulation.

Many of the major electric power companies used the data for such purposes as responding to customers in the event of a disaster, but KEPCO is said to have viewed the contract information of more than 50,000 households for marketing purposes over a three-year period and obtained nearly 4,000 contracts, which is extremely heinous.

The ministry’s Electricity and Gas Market Surveillance Commission regularly monitors the companies’ compliance with laws and regulations, but it failed to detect the wrongdoing. There is an urgent need for the government to expand and improve its monitoring system.

Violation of the Electricity Business Law can only result in the economy, trade and industry minister ordering corrections, and a fine of up to ¥3 million can be imposed only when there is failure to comply with such orders. There is no provision that directly punishes unauthorized access, so it will be essential to strengthen the penalties in the future.

Scandals have emerged one after another with major power companies. In March, the Japan Fair Trade Commission found that KEPCO, Kyushu Electric, Chubu Electric Power Co. and Chugoku Electric Power Co. had violated the Antimonopoly Law by forming a cartel to sell electricity to businesses, and three of these companies were ordered to pay punitive charges totaling over ¥100 billion.

Although KEPCO escaped the charge on the grounds that the company “turned itself in” voluntarily, it is believed to have played a central role in the cartel. KEPCO was also hit with a business improvement order in 2020 over its executives and others accepting money and goods.

When will compliance with laws and regulations be thoroughly enforced? Electric power companies must become aware of the importance of their responsibility to provide a stable supply of electricity.

(From The Yomiuri Shimbun, April 24, 2023)