How is Tokyo Electric Power Company one year after Japan's electric market liberalisation?

CEO Tomoaki Kobayakawa shares the company's plans moving forward.

It has been a year since Japan opened its energy market, and TEPCO’s retail arm only has two missions in mind: win back customers who switched providers, and etch a name in the country’s gas market by July 2017.

It has barely been months since Tokyo Electric Power Company Holdings appointed a new overall president ,Tomoaki Kobayakawa. Asian Power caught up with the then president of TEPCO’s retail arm, TEPCO Energy Partner, to discuss the company’s plans of wooing customers who have switched contracts amidst the liberalisation, and venturing into the country’s $21b gas market.

The 53-year old industry veteran has been with TEPCO since 1988 and has been engaged in the electricity business ever since, mainly focussing on corporate sales. He was appointed TEPCO Energy Partner’s CEO in April 2016 when the company transitioned to a holding system and restructured into three independent businesses.

What were the previous positions you held that led you to being the president now?

My previous position was Corporate Sales Division General Manager, Customer Service Company. For a long period of time, I was engaged in corporate sales in a deregulated and competitive environment and in solutions sales to respond to customers’ concerns over facilities in use. I was also involved in the development of a heat-pump water heater for homes, “Eco-cute”, which uses natural refrigerant — the first of its kind in the world.

Through such experience, I learned to develop strategic thinking and a sales mentality in a situation where utility sales people did not need to promote their services under a monopoly market. Under the current situation where the electricity retail market — including households — is fully deregulated, my main role is to improve sales capabilities, deepen customers’ understanding, and create new value for our company, utilising my past experience.

My theory is: “No sales persons are needed if you compete on price alone.”

What are your business philosophies?

Being in charge of the retail division, our vision is to be a company trusted by customers and that continues to strive to create new value. I believe this is a chance to develop this company from a mere electric power company to an integrated energy services company. To achieve this, it is important to have partners from different types of businesses, and we would like to create a new market and new value with collaboration that has never happened before.

TEPCO Energy Partner will continue to create new value in order to respond to the various needs of society, as well as strongly support customers’ daily lives and companies’ growth. The company aims to be a partner that develops together with its customers. I believe that the company should develop
new products and services from the perspective of society and customers, by aiming for “co-creation” rather than “competition,” even though it has to compete against rival companies in the deregulated electricity retail market.

What are your top three priorities for TEPCO Energy Partner?

TEPCO Energy Partner’s aims are the following: Putting the customer first. The company sees the full deregulation of the electricity and gas markets as a new opportunity to provide high value added and develop products and services. It will strive to be selected by customers, by providing products and services that will lead to a safe, comfortable life and support business development while achieving low costs.

Secondly, it’s about business development through service area expansion. This include customers buying not only electricity but also total energy, including gas and various services and appliances. The business will develop more by providing new services and added value, not just by earning profits from selling more energy.

The company will strive to expand nationwide and build a successful energy-saving business, not being fearful of a decrease in demand due to energy-saving or competition. Lastly is the creation of new value for customers. Facing the era of full-scale energy competition, the company will create new
markets and value through collaboration that has never happened before. Collaboration with different types of business has infinite possibilities, but will require speed. The company will create new services by collaborating with different types of businesses and maximising its speedy approach as a retailer because it takes time to do this alone.

What are the biggest challenges TEPCO Energy Partner is currently facing and what motivates you in making sure these challenges are being overcome?

Our mission, and our challenge, is that of “responsibility” and “competition”. Regarding the challenge, TEPCO Group exists to fulfill its responsibility of revitalising Fukushima. The company in charge of retail business will contribute to such efforts by earning profits through its business. However, profits are earned not by one’s own efforts but by being selected by customers. Our biggest mission is to respond to the expectations from customers and society through sales and services. Our motivation, on the other hand, is to hear customers’ voices of appreciation for our additional services that solve home appliance problems under the new rate plans, as well as to see customers who switched their contracts to new power companies returning to our services.

What is TEPCO Energy Partner’s biggest plan to date? What should the industry be excited about?

Seeing the full deregulation of the electricity retail market as a chance, TEPCO Energy Partner will develop from a mere electric power company to an integrated energy services company. It will meet the challenge of this new market by not only competing but also co-creating through collaboration with different types of businesses.

TEPCO will be exploring the gas market and will be working with Nichigas. How do you plan to tackle the competition? Nichigas, which will provide wholesale supply of gas from TEPCO Energy Partner for household gas sales, will begin sales from April 2017 and TEPCO Energy Partner will begin from July 2017.

In tandem, we aim to sell gas to about 500,000 households for the first year of full market deregulation and to about 1 million households within the 2019 fiscal year. To earn sales from about 40,000 households for the first fiscal year, TEPCO Energy Partner first needs to prepare new rate plans and services that appeal to customers. This preparation is currently in progress. The company will create profitable package services with added value that customers will want to select, combining added services of safety and security with package sales of electricity and gas.

To gain more customers for its gas sales and also activate the urban gas market — which is more difficult to enter compared with electricity — the company will also create a new platform that integrates the know-how and operational functions, such as urban gas supply, consignment operations, and
security and equipment maintenance, which both TEPCO Energy Partner and Nichigas possess.

The platform needs to be created as soon as possible to activate the gas market and the details are being examined with the aim of completion within 2017. One of the options will be the establishment of a joint venture with Nichigas.