Chubu and TEPCO to team up for new coal plant in a rare move for the Japanese power industry

Tokyo Electric Power Co. and Chubu Electric Power Co. are in talks on their joint construction of a coal-fired thermal power plant in Ibaraki Prefecture, east of Tokyo, informed sources revealed this week.

This is a rare move in the Japanese power industry where few companies do business in their peers’ service areas and may become a catalyst for knocking down power suppliers’ regional monopoly, observers said.

According to sources, the two utilities are considering setting up a joint company to operate the envisaged power plant, which is expected to generate some 600MW of electricity, of which some 70 pct would be supplied to TEPCO. The rest of power would be sold in the Tokyo metropolitan area by Chubu Electric, whose mainstay service area is in central Japan.

The new plant would be built at the site of TEPCO’s Hitachinaka thermal power plant in the village of Tokai in Ibaraki Prefecture and is likely to start operation in 2019. Chubu Electric is believed to agree to put up 90 pct of the plant operator company’s capital.

TEPCO and Chubu Electric hope that the new power plant will be part of the Tokyo power company’s plan to procure 2.6 million kilowatts of electricity through an open bidding process, set to be closed on Friday, the sources said.

Contract winners will be announced in July.

Despite the liberalization of electricity sales to corporate users since 2000, only one regional utility, which is Kyushu Electric Power Co. started supplying electricity outside its traditional service area. The government hopes to promote further competition among power suppliers ahead of its planned liberalization of retail electricity sales in 2016, pundits said