Photo/Illutration Tokyo Electric Power Co. explains its power-saving point program on its website. (Captured from the website)

In the face of concerns about a possible power crunch this winter, the government plans to provide support to electric utilities’ point programs to reward power-saving efforts by households and businesses.

There is a strong case for promoting efforts to reduce electricity consumption to avert a power crisis.

However, it remains open to question whether this policy will prove effective, despite the substantial amount of public funds required.

We urge the government and electric power industry to carefully consider the plan so it does not end up being a rough-and-ready measure for grandstanding.

The power supply-demand balance this winter is expected to be tighter than it is this summer.

Repeated calls to cut back on electricity use every time a shortage looms could make consumers jaded and unresponsive.

For this reason, we believe it is necessary to introduce systems to encourage consumers to reduce their power consumption through voluntary efforts in addition to expanding the supply capacity.

One mechanism is to reward power savings with cuts in charges or points that can be used for shopping.

Some electricity retailers have already adopted programs of this kind, but the system has yet to become widely adopted.

The government has decided to offer incentives to promote reward point programs.

It plans to award 2,000 yen ($15) worth of points to households and 200,000 yen worth to businesses if they register.

The measure will cost 180 billion yen.

The government announced the step immediately before the July 10 Upper House election as part of a policy package to combat rising prices.

But there is no guarantee that those who registered for a point program will actually reduce their power consumption.

Subsidies designed to encourage registration could end up being a giveaway of taxpayer money without making a real difference.

What is crucial is to ensure that cuts in power charges and reward points will work as an impetus for power savings.

Unless the system is designed to ensure consumers reduce electricity usage, it will do nothing but promote registration with programs.

Many existing programs offer points worth 5-10 yen for every 1 kilowatt-hour of electricity conserved.

If these rewards result in large numbers of consumers saving power when the supply-demand balance is tight, electric utilities will be able to avoid buying high-priced electricity from other suppliers and save money.

Given the benefits utilities can expect, some experts say the amounts of rewards are too small.

The electric power industry should develop programs that offer more reasonable rewards for power savings.

The government in the meantime said it plans to provide subsidies to the rewards that utilities offer. It has yet to announce conditions or amounts for this part of the policy effort.

There is a reasonable case for such subsidies. But their role should be limited to a supportive one, given that the whole idea is to use price and market mechanisms to promote power savings.

The system will not be sustainable if it continues to depend on government subsidies.

Other challenges include making programs accessible for consumers who are not familiar with procedures on smartphones and measuring consumers’ power-saving performances in an impartial manner.

Despite all the issues to be addressed, the government plans to go ahead with the measure without Diet debate by tapping into reserve funds.

The government had sufficient time to formulate a draft supplementary budget to finance the measure in time for winter and submit the plan for debate on the Diet floor.

The rash manner in which the government is seeking to push through the measure is questionable from the viewpoint of fiscal democracy and should not be overlooked.

--The Asahi Shimbun, Aug. 13

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