Major regional power companies that have been embroiled in varying scandals in recent years are hoping to win back the trust of consumers after being ordered to pay fines and formulate business improvement plans. 

Five companies including Osaka-based Kansai Electric Power Co. and Fukuoka-based Kyushu Electric Power Co. submitted corrective plans to the trade ministry on May 12 following the illegal browsing of information on customers of rival power producers and suppliers (PPSs).

Major electricity companies have also been ordered to pay fines for forming cartels that eliminated competition for corporate customers.

The five companies are Kansai Electric, Kyushu Electric, their power transmission and distribution subsidiaries, and Chugoku Electric Power Transmission & Distribution Co., which is a subsidiary of Hiroshima-based Chugoku Electric Power Co.

Late last year, Kansai Electric was found to have illegally accessed information on customers of PPSs.

A defect in the data system of Kansai Transmission and Distribution Inc. allowed Kansai Electric employees access to information pertaining to PPS subscribers, including their names, phone numbers and power usage.

The Electric Utilities Industry Law forbids data of this nature to be accessed by parties other than power transmission and distribution companies.

The ministry’s Electricity and Gas Market Surveillance Commission (EGC) asked other electricity companies to ascertain whether they had done the same, and some admitted to the wrongdoing. 

Kansai Electric has announced disciplinary actions against 16 of its officials for the illegal information browsing.

Kansai Electric President Nozumu Mori said at a news conference on May 12, “We will be reborn as a company group that will never allow (misconduct) to occur, this time for sure.”

As part of the disciplinary actions, Mori and Mikio Matsumura, the company’s vice president, will have their monthly salaries cut by 50 percent for three months.

In addition, Sadayuki Sakakibara, the company’s chairman, who is not among the 16 officials who were disciplined, will voluntarily return 20 percent of his salary for three months.

Kansai Transmission and Distribution, which leaked the customer information of PPSs to Kansai Electric employees, has also decided to discipline eight company officials, including its president.

Under their business improvement plan, the companies pledged to wholly separate their information systems in 2027 to prevent a recurrence.

However, Kansai Electric has exhibited a repeated pattern that once misconduct has been found, the company vows a fresh start, then immediately other misconduct is revealed.

For example, 80 Kansai Electric officials, including former executives and employees, had been bribed by a former deputy mayor of Takahama, Fukui Prefecture, where the company operates a nuclear power plant, by receiving a total of around 400 million yen ($2.94 million) in cash and gifts since 1987.

The company found out about this internally and secretly disciplined its directors in 2018.

But in the same year, the company performed a main role in forming cartels with other major electricity companies to end competition for lucrative corporate customers.

The company’s top management, including then Vice President Takashi Morimoto, decided to scale down the firm’s sales activities beyond its traditional areas.

Then the company informed other electricity companies of the decision.

The bribery allegations became known outside the company in 2019.

The investigation on the issue by a third-party committee found other misconduct by the company in that it secretly compensated directors for reductions in their remuneration following an increase in electricity rates after the nuclear accident triggered by the 2011 Great East Japan Earthquake and tsunami disaster.

The company in 2020 appointed Sakakibara, who is a former chairman of Keidanren, Japan’s largest business lobby, as its chairman to enhance its governance following a series of scandals.

It also established a compliance committee. However, these measures failed to stop further misconduct.

The company’s 62 employees illegally browsed information on customers of PPSs for sales purposes until the practice was uncovered in 2022.

It was also found last year that employees of its group companies fraudulently gained certification as a “works execution manager,” which is a government-accredited qualification.

In addition, it was discovered earlier this year that some of the sales branches of Kansai Transmission and Distribution had failed to measure and report the voltage it provides, which is their statutory obligation, and compiled false data as a result.

A senior company official said that one of the reasons why it continues committing misconduct is that it has been unable to adjust to the market conditions brought by the 2016 liberation of the electricity retail market.

The senior official said, “We should have asked ourselves whether we were aware of the competitive environment we were in or whether our behavior was appropriate.”

In addition to Kansai Electric, Kyushu Electric Power and its power transmission and distribution subsidiary, as well as Chugoku Electric Power Transmission & Distribution, also submitted their business improvement plans to the trade ministry on May 12 with regard to the illegal information browsing.

Following the revelation of the illegal information browsing scandal, the Federation of Electric Power Companies of Japan, which counts 10 major electricity companies as its members, has published a policy to promote the “physical separation” of information systems of major electricity companies and their transmission and distribution subsidiaries.

In their respective business improvement plans, Kyushu Electric and Chugoku Electric vowed to execute the separation by the end of fiscal 2025, and June 2026, respectively.

These companies also decided on disciplinary actions for presidents and relevant directors.

Kyushu Electric will cut the salaries of six senior officers, including those working for its transmission and distribution subsidiary.

For example, it will reduce the monthly salary of company President Kazuhiro Ikebe by 40 percent for two months.

Chugoku Electric Power Transmission & Distribution will also reduce the monthly salaries of three of its senior officials.