Japan Has ‘Slim’ Chance of Splitting Utilities as Blackouts Loom

Prime Minister Naoto Kan’s proposal to split electricity monopolies into generation and distribution companies as part of his plan to wean Japan from nuclear energy may be opposed by utilities as the nation faces power shortages.Kan’s government last week announced its plan to diversify away from nuclear power after a public backlash following the Fukushima disaster, and shift to alternate sources gradually to avoid shortages and higher prices. The strategy will consider separating generation and distribution and encourage “various operators” to enter the electricity market, Kan said July 29.“Breaking up the electricity grid is a great idea in theory, but the power companies are against it and the chances of it actually happening are slim,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “The debate will end at the discussion stage instead of translating into policy unless the government is willing to take on the utilities. The reaction in the market will be limited.”

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