Fossil costs drive Kansai rate hike

26 November 2012

As all but two of the country's nuclear reactors remain shut down, the Kansai Electric Power Company (Kepco) has today applied to Japan's Ministry of Economy Trade and Industry (METI) to raise the region's household electricity prices by 12% in order to offset soaring fossil fuel imports.

Kepco's outlook for the period 2013 to 2015 clearly sets out the impact of the fuel switch that has resulted from the idling of nine of the company's eleven reactors. Compared to figures used to justify the company's last rate change in 2008, increased fossil fuel imports are expected to cost an extra ¥440 billion ($5.4 billion) per year - roughly double the previous amount. This is by far the largest movement in a list of changes that forecasts an overall increase of ¥280 billion ($3.4 billion) for the utility's annual expenses. The costs of maintaining its nuclear plants are expected to decrease by some ¥26 billion ($320 million) for fuel purchases and ¥35 billion ($430 million) for waste and decommissioning charges.

Currently Ohi units 3 and 4 are Kepco's - and Japan's - only operating units, although it has announced its desire to see two further units at the Takahama plant restarted by the middle of next year. This may run into difficulty however as the country's new nuclear regulator has announced a similar time frame for implementation of new operating requirements.  

The company apologised to customers for the inconvenience but noted that with no clear time frame in place for the restart of reactors it was forced to take measures to ensure the long term stability of electricity supply and to plan accordingly. It expects to introduce the new rates in April next year. METI acknowledged receipt of the request for an increase to the domestic tariff and immediately announced that it would hold a public hearing on the proposed increases. Kepco also wants to raise its tariff for commercial customers by 19%, but as part of the country's deregulated electricity market this does not require METI approval to implement.

Kepco now joins Tepco as the second Japanese utility to seek to pass on the rising cost of fossil fuels. According to the Japan Times, Tepco received permission to increase household rates by 8.5% in July in order to help pay for the fuel switch as well as some of the costs of the Fukushima Daiichi nuclear accident. A third utility, the Kyushu Electric Power Company, announced in late October that in the face of its largest ever deficit it was reviewing tariffs also, although it has yet to approach METI with a request.

The Japanese parliament has now been dissolved ahead of a national election scheduled for 16 December. The country's future nuclear policy may be changed if the incumbent Democratic Party of Japan prime minister Yoshihiko Noda is ousted. In September the Noda government announced that it intended to gradually wean the country off nuclear power - although it refused to set a date for this.

Researched and written
by World Nuclear News

Filed under: Energy policy, Japan