Japan set for first post-Fukushima drastic power rate cuts

11 July 2017, Week 27, Issue 415

In a bid to regain some lost ground in the fully liberalised domestic market, Kansai Electric Power has unveiled plans to make drastic rate cuts in August, becoming the first major Japanese electricity supplier to do so since the 2011 Fukushima nuclear disaster.

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Kansai said on July 6 that it would reduce rates for households and companies by 4.29% on average in August. Rates for households and companies will specifically be lowered by 3.15% and 4.9% respectively on average.

Monthly electricity bills for Kansai’s average household customers will be 6,721 yen (US$59) from August, down 180 yen from the current 6,901 yen (US$60.37). The drastic rate cuts have yet to be approved by the Ministry of Economy, Trade and Industry (METI).

These proposed cuts follow the recent resumption of operations at the No. 3 and No. 4 units of Kansai’s Takahama nuclear power plant (NPP) in Fukui Prefecture, central Japan.

Most of resource-poor Japan’s nuclear reactors remain shut in the wake of the Fukushima disaster owing to safety concerns. There are currently only five reactors online, including the two units at the Takahama plant.

Kansai, based in Osaka City, Osaka Prefecture, western Japan, imposed massive rate hikes twice after the Fukushima disaster in response to sharply higher fuel costs for thermal power generation.

Kansai lost its status as Japan’s second largest electric utility in terms of power sales volume for the first time in the fiscal year ended March 31 amid intensifying competition. Kansai lost the second slot to Chubu Electric Power, headquartered in Nagoya City, Aichi Prefecture.

In fiscal 2016, Kansai Electric Power’s power sales amounted to 121.5 billion kWh, down 4.7% from a year earlier, while Chubu Electric Power’s power sales amounted to 121.8 billion kWh, down a paltry 0.2% year on year.

Industry leader Tokyo Electric Power Co.’s (TEPCO’s) power sales also shrank 2.2% in fiscal year 2016 from a year earlier to 241.5 billion kWh, roughly twice Chubu’s power sales.

Kansai Electric Power blamed the decline in power sales on the loss of some customers to new market entrants, especially Osaka Gas. Japan’s retail electricity market was fully liberalised on April 1, 2016. More than 300 companies have since broken into the market, spurring competition to offer better services and lower rates.

Japanese households and other small-lot electricity users can now choose their suppliers freely. They had previously been allowed to purchase electricity only from 10 major electric power companies in their regions.

 

Edited by

Richard Lockhart

Editor

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