Chugoku Electric advertised cheaper plans that weren't — Japan's biggest ad fine

Chugoku Electric Power, the regional utility serving western Honshu, advertised its household electricity rate plans on its own website. The comparative claims were precise: 'Plan B' was presented as cheaper than 'Plan A' when average monthly usage was 400 kWh or less, and 'Plan C' as cheaper than Plan A when usage exceeded 400 kWh. Consumers comparing plans on the utility's own site saw a clear hierarchy that did not always hold.

On 28 May 2024 Japan's Consumer Affairs Agency ordered Chugoku Electric to pay an administrative fine of JPY 1,655,940,000 (about US$11 million) under Article 8 of the Act against Unjustifiable Premiums and Misleading Representations. The CAA found the representations were capable of unfairly inducing customers and impeding ordinary consumers' voluntary and rational decisions, violating Article 5 item (ii) of the Act. In some cases Plan B was not lower than Plan A even under 400 kWh, and Plan C was not lower than Plan A even above it.

The fine was the largest ever ordered under the Act. Because the surcharge system sets the penalty at 3% of the sales associated with the misrepresentation, the fine tracked Chugoku Electric's affected sales of JPY 55,198.39 million. The utility, facing Japan's deregulating electricity market, had been competing for the household customers its own website was meant to guide.