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Finance GreenWatch » 8.Eathquake & Nuclear accident » Power firms plagued by rising costs after nuke crisis set to hike electricity charges(Mainichi)

Power firms plagued by rising costs after nuke crisis set to hike electricity charges(Mainichi)

OSAKA — Kansai Electric Power Co. President Makoto Yagi said on Oct. 29 that his company has begun to consider raising electricity charges as part of its efforts to address its tough business conditions in the wake of the outbreak last year of the crisis at the Fukushima No. 1 Nuclear Power Plant, setting the stage for other power companies across the country to follow suit.

Headquarters of Kansai Electric Company

Kyushu Electric Power Co. is also expected to unveil its plan to consider a rate hike on Oct. 30. Hokkaido Electric Power Co., Shikoku Electric Power Co. and Tohoku Electric Power Co. are already considering raising electricity prices, paving the way for almost all power firms in the country to raise electricity charges. Tokyo Electric Power Co., the operator of the crisis-hit Fukushima nuclear power station, raised electricity charges in September this year.

Although President Yagi said the timing of the raising of electricity charges was “undecided,” his company is considering raising fees for households by an average of about 15 percent and for corporate users by 20 to 30 percent as early as April 2013. Electricity charges for households are regulated by the government.

It is believed to take about four months for the government to examine the company’s request for a rate hike. As a result of the screening, the government could demand the company make additional cost cuts, among other steps. It would be Kansai Electric’s first fully fledged government-approved rate increase in 33 years since 1980 in the aftermath of the second oil crisis.

Kansai Electric said on Oct. 29 that it logged a group net loss of 116.7 billion yen for the April-September 2012 period, compared with a net profit of 20.4 billion yen registered for the same period a year earlier. That is the biggest group net loss the company has reported for an April-September period since its founding.

Because operations at nine of its nuclear reactors have been offline, with only the No. 3 and 4 reactors at the Oi Nuclear Power Plant having been reactivated, the fuel cost to run its thermal power plants rose 180 billion yen in the April-September period from the same time a year earlier. Fuel costs are expected to rise by 700 billion yen in the current full business year from the level registered before the Fukushima nuclear disaster. Kansai Electric relies on nuclear power for about 50 percent of its energy supply — the highest figure among major electricity companies in the country. Therefore, the company could not fully address the impact of the rise in fuel costs by implementing cost-cutting measures it had already announced.

Yagi said the company could not foresee its earnings for the current fiscal year through March 2013. But according to estimates made by the Agency for Natural Resources and Energy (ANRE), if all of Kansai Electric’s nuclear reactors, except for the two reactors at the Oi plant, were to remain offline, the company’s net assets are expected to drop to 574.7 billion yen as of the end of March 2013 — a drop of 582 billion yen from a year earlier. Thus, it is highly possible that the company’s liabilities would exceed its assets within the business year ending March 2014.

Yagi said, “If the situation in which we cannot reactivate the nuclear reactors continues, our financial standing will vastly deteriorate, threatening to hamper our efforts to ensure a stable power supply.”

Kyushu Electric also has all of its six nuclear reactors offline. According to ANRE’s estimates, the power company is expected to incur additional costs of 470 billion yen in the current business year and its net assets are expected to drop to 308.8 billion yen as of the end of March 2013. Kyushu Electric is poised to formally announce its intension to raise electricity charges when it releases its half-year earnings on Oct. 30. The company will try to raise utility rates around the same time as Kansai Electric.

Hokkaido Electric, Shikoku Electric and Tohoku Electric are also exploring the possibility of raising electricity prices because they have already been hit by deficits due mainly to the suspension of operations at their nuclear reactors. Chubu Electric, Hokuriku Electric and Chugoku Electric are cautious about rate hikes. But a Chubu Electric official said, “If the nuclear reactors continue to be offline in the future, we will have to look into the possibility of raising prices.”

If Tokyo Electric were not able to reactivate the Kashiwazaki-Kariwa Nuclear Power Plant in April 2013, it would have to take measures including additional rate hikes.


Filed under: 8.Eathquake & Nuclear accident