Don’t Leave Opaque Business Practices Unchecked

The lack of clarity around liquefied petroleum gas, which is used by about 40% of households in Japan, especially in rural areas, has become an issue in terms of bills and business practices. It is hoped that the government will take corrective measures to protect users.

An expert panel of the Economy, Trade and Industry Ministry is considering strengthening regulations on the structure of bills in the LPG industry. The panel plans to compile a report this summer.

In many cases, as a matter of business practice, gas companies install water heaters, gas stoves and other equipment free of charge in apartments and other rental housing that use LPG, and the costs are added to the gas bills and then are collected from the residents. There are few cases in which these companies clearly indicate the portion of the installation costs passed on to users.

Residents are not sure if the gas bills they are being charged are appropriate. Some have complained that they are being charged unreasonably high prices. It is essential to change this practice and make the overall fee structure transparent.

LPG is mainly used in areas that are not well served by city gas supply networks. It is often handled by small and midsize businesses and microenterprises.

The business practice has been in place for a long time. The owners of rental housing are able to reduce equipment costs, while in return, gas companies get contracts from residents through the mediation of the owners.

According to a survey by the ministry, about 60% of all gas companies installed the equipment free of charge at the request of the owners. In some cases, owners terminated the deal when a company refused their request.

The government has been taking steps to address this issue for some time. In 2017, the ministry established operational guidelines that require the disclosure of equipment costs added to gas bills, among other points. However, as the guidelines have no legally binding power or penalties, they have not been implemented sufficiently.

Legislation should be established to require the disclosure of the details of equipment costs in gas bills.

Some gas companies are reportedly covering costs not only for gas-related equipment such as water heaters, but also installation costs for air conditioners, intercom systems and other equipment at rental housing, and passing these expenses on in the gas bills. It makes no sense to add the costs of equipment that have nothing to do with gas usage to the prices.

According to the Hokkaido University Co-op, which is investigating this issue, the LPG bills for rental housing for students in the same area varied, sometimes by more than double. This is believed to be due mainly to the presence or absence of the burden of equipment costs.

If residents discover that the gas bills are relatively expensive after moving into rental housing, it is difficult for them to move out again immediately. It is also impossible to switch gas contracts in housing complexes.

The Land, Infrastructure, Transport and Tourism Ministry, which has jurisdiction over the real estate industry, bears a significant responsibility, too. Requiring real estate agents to explain the structure and level of bills for LPG in advance when they introduce rental properties may be something to consider.

(From The Yomiuri Shimbun, May 18, 2023)