A Spatial Equilibrium Analysis of Transmission Charge Reform in Japan's Electric Power Industry

Author Name AKIYAMA Shu-ichi  (Kushiro Public University) /HOSOE Nobuhiro  (National Graduate Institute for Policy Studies)
Creation Date/NO. April 2006 06-E-022
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A key intention of the regulatory reform of transmission charge schemes on Japan's electric power market was to promote inter-regional competition between power suppliers by lowering long-distance transmission charges with a postage-stamp charge scheme. This can lead to extensive use of inter-regional links and cause congestion. Congestion segments the market into several regional markets, making the reform less successful. We developed a nine-region spatial equilibrium model to simulate the reform at the peak-load hour. We found the reform would lead to significant increases of inter-regional transmission and congestion at the link between the 50-Hz area and the 60-Hz area.