POLICY ANALYSIS OF ENSURING STABLE SUPPLY OF ELECTRICITY AND SUSTAINING NUCLEAR AND RENEWABLE ENERGY AFTER INTRODUCING COMPETITION INTO POWER INDUSTRY

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There are two elementary systems to promote the retail competition in electricity industry, the pool system and the wheeling system. In Japan the partial liberalization by wheeling system was implemented in March 2000, but the vertical integration of incumbents was not changed. The policy of liberalization will be reviewed in 2003. If the priority is on fostering new entrants, the pool system may be introduced.In England and Wales, the Fossil Fuel Levy is commenced in order to maintain nuclear and renewable energy in the compulsory pool. It is the artificial maneuver linked with Non-Fossil Fuel Obligation in the competitive situation. As the payer of the Levy is all customer of electricity, FFL is not regarded as public subsidy, but one of cross-subsidization between non-fossil and fossil fuels.Regulator allows existing companies to cover Stranded Cost in USA.In California, cost of purchasing electricity from QF and of nuclear investment is reckoned as Stranded Cost. Incumbents can add the cost to price as Competition Transition Charge, and end users must pay that charge. Concrete solutions are different from States, but they have common tendency to fix inside market mechanism.Once pool system is selected under unbundling structure, stable supply system will be not ensured. Therefore the government have to provide supplementary device. If the government does not intervene in reform process of deregulation, policy objectives, such as environmental protection and universal service will not be attained. In order to sustain public interest including stable supply, environmental protection and universal service, wheeling trade system is one option.