Who has watched ΔkW prices, and how
— five years from report requests to Type B consultations and ex-post monitoring

Who watches a ceiling that the text calls “desirable”, and how? What happens to bids outside it? We follow the five years since the market opened in 2021 through the documents of the Electricity and Gas Market Surveillance Commission (the Commission, or EGC) and its expert committees. The one question: how far has the ceiling on ΔkW prices actually bitten? What the text says is in 50-2 Rules.

1. Five years at a glance

The story falls into three stages. In 2022–2023, report requests (requiring operators to submit materials) were made for products where highs appeared, and the guideline was amended. In FY2024–2025, each operator's adder was settled through consultation with the Commission's secretariat (the Type B consultation). From FY2026 consultation has stopped: operators calculate the amount themselves and the Commission checks afterwards.

2. The first highs, and report requests

In August 2022, tertiary reserve ② (one of the balancing market's products) cleared at up to ¥347.8/kW·30min. The Commission made report requests about bid prices and the like for August and reported the results of its hearings to the 78th meeting of the Expert Committee on System Design (25 October 2022). In February 2023, report requests on bid prices and the like were reportedly also made to 10 market participants in tertiary reserve ① (509th meeting of the Commission, Document 3).

Meanwhile the guideline was amended every year: on 10 March 2023, 25 March 2024, 24 March 2025 and 13 March 2026. Each was preceded by a formal recommendation from the Commission (13 December 2022, 21 November 2023, 2 December 2024 and 10 December 2025).

3. Two years of setting it by consultation

With the November 2023 recommendation and the March 2024 revision that followed it, the adder split in two: ¥0.33 that anyone can use (Type A), and an amount for recovering fixed costs settled through consultation with the secretariat (Type B). For the two years of FY2024 and FY2025, the Type B amount was set by consultation. Consultation was mandatory for operators deemed likely to hold significant market power; for everyone else the text said it was “not mandatory”.

The consultation record has been published: 5 cases in FY2024, and 34 in FY2025 as of 17 October 2025. By the document's categories, that is 28 generating resources, 1 battery and 5 battery VPPs. As the reason applications rose in FY2025, the document cites the sharp fall in the FY2025 capacity-market clearing price from the year before.

On the level of the agreed amounts, the document gives only a few numbers. Those above ¥1.64/ΔkW·30min were scrutinised individually and more strictly. Some initial applications were in a price band above ¥1,000/ΔkW·30min. And it judges the agreed amounts to have been “at a high price level at which clearing is practically difficult”. The individual agreed amounts have not been published.

Here the subject of this series comes into view. Most consultations were for resources other than batteries and battery VPPs, and their adders sat above market clearing prices. The ceiling was high; it can be read as never having bitten as a cap on revenue. Batteries are different. They can bid into most slots of the day, so the divisor is large, and with the same formula the adder comes to around ¥1 (50-3 Calculation). The same ceiling does not reach other resources, but it does reach batteries.

The state of fixed-cost recovery has been reported too. Document 6 of the 21st meeting of the Expert Committee on System Design and Market Surveillance (19 June 2026) examined 37 cases from 9 companies with Type B resources consulted in FY2025 (28 generating resources, 4 batteries, 5 battery VPPs). It showed that those that had finished recovery moved to Type A at the point they finished, and that recovery rates for those not yet recovered were roughly 1–88%. A note says these rates are relative to the upper limit on fixed-cost recovery, not to total fixed costs.

The ¥1.64 line, above which consultations looked “more strictly”, also works as a yardstick for a battery's adder. The 2 MW / 8 MWh adder we set from published figures is ¥1.411 even in year 1, below this line. Even with consultations gone, it is safest to assume that an adder above this level needs an explanation of why.

4. Items corrected in consultation

In the consultations, some items were asked to be taken out of fixed costs: business return, interest payments, corporate tax, capacity contributions, an expected awarded volume that was too small, and so on (14th meeting, Document 3, pp. 41–43). Where wholesale-market revenue was expected to be negative, there are cases where it was treated as zero. Of these, corporate tax and capacity contributions were written into the text as “not included” in the March 2026 revision.

Separately from the consultations, cases found in ex-post monitoring have been reported: attempts to recover past or future years' fixed costs within one year, and cases that did not return to ¥0.33 after recovering the current year's fixed costs (14th meeting, Document 3, p. 33). Each shows what the text's words “for the current fiscal year” are there to rule out.

5. FY2026 — no more consultation; checks after the fact

At the 14th expert committee meeting, the abolition of Type B consultations was settled. From FY2026, operators calculate the adder themselves. Operators deemed likely to hold significant market power have their approach to bid prices checked before trading starts, and report the fixed-cost recovery status of their Type B resources every quarter. For other operators, the same approach is described as “desirable” (guideline, pp. 4–5). Resources bidding at the Type A ¥0.33 are not subject to reporting.

The first results are in Document 6 of the 21st meeting (19 June 2026). Checking operators that had been awarded at high prices since the start of FY2026, the secretariat found calculations like these and asked for the method to be revised.

All three correspond to steps read in 50-2 Rules: “the divisor”, “apportionment over time” and “revenue from other markets”. The response was “asked for revision”; as far as we could confirm, there are no published cases that went on to a business improvement recommendation or order. We have not been able to check every document from the 22nd meeting (31 July 2026) onwards. Unsettled

6. What is still to come

FY2026 is the first year in which quarterly reports on fixed-cost recovery and after-the-fact hearings on high-priced awards are both running. Document 6 of the 21st meeting was the first report of the year. How the period from September, when the cap became ¥10, will be handled, and at which meeting, cannot be seen yet. Unsettled The expert committees' documents are posted on the Commission's website after each meeting. As new documents appear, we will add to this article.

7. How far overseas rules go

Within the six markets we checked, we found no case where an operator-specific adder derived from fixed costs is allowed on top of the capacity price for reserves (PJM in the US uses a flat adder). Overseas rules mainly target operators or situations with significant market power.

Sources: PJM Manual 11 and Manual 15; PJM Operating Agreement, Schedule 1 §3.2.2A; Monitoring Analytics, “State of the Market Report for PJM”, Q1 2026, Section 10; NYISO Market Services Tariff, Attachment H 23.3; CAISO Tariff Section 39; Ofgem, “Transmission Constraint Licence Condition Guidance” (June 2024); ACER Decision 09/2024, Annex II.

US rules on the capacity side are cost-based and centred on opportunity cost — close to the first term of Japan's formula. We found no case of adding an amount derived from fixed costs (PJM's $12/MWh is a flat adder). UK and EU rules apply mainly to energy (kWh) prices. Japan's ceiling reaches wider and deeper in two respects: it is described as “desirable” for every operator, and while it allows an adder derived from fixed costs, that adder comes out small for batteries.

8. What owners should keep on file

With consultations gone, the responsibility for keeping the evidence has moved to operators. A 2 MW owner will want to keep the following at hand.

• The breakdown of fixed costs. How depreciation is set, repairs, the generator-side charge, and the part of aggregator costs identified as fixed.
• The basis for the volume you can bid. Charge/discharge constraints, and how biddable slots are counted.
• Capacity-market records. The start date of operation, and whether you could bid into the capacity market, did bid, and were awarded. This decides whether the deemed deduction applies.
• Your contractor's position. Whether your aggregator is an operator subject to the ex-ante measures, and how your plant figures in the quarterly reports.

Each is material for showing, when the Commission asks for an explanation, that the year's bids were inside the formula. Items the formula leaves open are listed, with whom to ask, at the end of 50-2 Rules.

Sources

• METI, “Balancing Market Guideline” (需給調整市場ガイドライン), revised 13 March 2026 (reference: history of deliberations, pp. 10–13) https://www.egc.meti.go.jp/info/guideline/pdf/20260313001a.pdf
• EGC, Expert Committee on System Design, 78th meeting, Document 3 (25 October 2022) https://www.egc.meti.go.jp/activity/emsc_system/pdf/078_03_00.pdf
• EGC, recommendation on revising the “Balancing Market Guideline” and related matters (21 November 2023) https://www.egc.meti.go.jp/info/public/pdf/20231121001a.pdf
• EGC, 509th meeting, Document 3 (16 April 2024) https://www.egc.meti.go.jp/activity/emsc/pdf/509_03_00.pdf
• EGC, Expert Committee on System Design and Market Surveillance (制度設計・監視専門会合), 14th meeting, Document 3 (29 October 2025) https://www.egc.meti.go.jp/activity/emsc_systemsurveillance/pdf/014_03_00.pdf
• EGC, Expert Committee on System Design and Market Surveillance, 21st meeting, Document 6 (19 June 2026) https://www.egc.meti.go.jp/activity/emsc_systemsurveillance/pdf/021_06_00.pdf
• e-Gov, results of the public comment on the draft revision of the “Balancing Market Guideline” (13 March 2026) https://public-comment.e-gov.go.jp/pcm/download?seqNo=0000309544
• PJM, “Manual 11: Energy & Ancillary Services Market Operations”; Monitoring Analytics, “2026 Quarterly State of the Market Report for PJM: January through March”, Section 10 https://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2026/2026q1-som-pjm-sec10.pdf
• NYISO Market Services Tariff Attachment H 23.3 https://nyisoviewer.etariff.biz/ViewerDocLibrary/MasterTariffs/9TariffSections/2505.htm
• CAISO Tariff Section 39 (Market Power Mitigation Procedures) https://www.caiso.com/documents/section-39-market-power-mitigation-procedures-as-of-aug-1-2024.pdf
• Ofgem, “Transmission Constraint Licence Condition Guidance” (June 2024) https://www.ofgem.gov.uk/sites/default/files/2024-06/TCLC_guidance_10June24.pdf
• ACER Decision 09/2024 Annex II https://eepublicdownloads.entsoe.eu/clean-documents/nc-tasks/ACER_Decision_09-2024_on_Pricing-Annex_II.pdf