US trade representative Charlene Barshefsky had asked Japanese trade minister Mitsuo Horiuchi at a meeting in France to consider extending existing trade and deregulation agreements to cover the energy sector. ``(The US request) will help facilitate deregulation in the electricity sector, and will improve the chances of foreign equipment suppliers winning orders from Japanese power firms," said Tadatoshi Utaka, analyst for Nikko Research Center Ltd.

A US trade official said Barshefsky had urged Japan to favourably consider a proposal to expand an enhanced initiative that would involve standards, certification and the testing of energy equipment. Japan's stringent and detailed regulations on the power industry have forced power utilities to purchase custom-made parts and equipment, rather than generic brands, resulting in fixed relationsbetween buyers and sellers, analysts said."Tokyo Electric Power Co Inc has its suppliers manufacture special parts designed solely for the company, Kansai Electric Power Co Inc requires custom-made equipment from its suppliers, and so on," said Naoto Hashimoto, analyst for the Financial Research Center of Nomura Securities Co Ltd.Japanese power firms buy most of their equipment from domestic manufacturers, many of which maintain close and long-established ties with their customers, analysts said.

Hashimoto said investment in plants and equipment by Japanese electric power utilities amounted to four trillion yen a year, or 20 per cent of total investment by the nation's private sector.

A lack of competition among power firms was another factor allowing them to buy costly custom-made parts and equipment rather than reasonably-priced generic items, he said.

Japan's 10 power firms, which enjoy regional monopolies, set utility rates about 20 per cent higher than other industrialised nations.Relaxedregulations coupled with competition -- they expected result of industry liberalisation -- would prompt power firms to seek cheaper parts and equipment regardless of the country in which the supplier was based, analysts said. Utaka said, however, that more opportunities for foreign suppliers would naturally mean fewer orders for their Japanese competitors. "Good or bad, power firms have been creating jobs for small and medium-sized parts suppliers in Japan. Those manufacturers would lose big chunk of their orders (as a result of deregulation)," he said.