Tohoku seeks to raise electricity rates

14 February 2013

Tohoku Electric Power Co has applied to the Japanese government to raise the region's household electricity prices by 11.4%. The utility faces increasing costs for fossil fuel to meet demand while its nuclear generating capacity remains idled.

The utility must gain approval from the Ministry of Economy Trade and Industry (METI) to raise household electricity rates, a process likely to take about four months. It also plans to raise rates for its industrial consumers by 17.7%, but does not require such approval to do so. If approved, these would be the first rate increases by the utility in the past 33 years. 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.

The main reasons for increasing the rates, it said, was to stem its financial losses whilst also covering the cost of buying fossil fuels and purchasing electricity from other utilities while its nuclear power reactors remain idle. At the same time, Tohoku is facing reduced demand from industrial customers and need to repair power infrastructure damaged by the March 2011 earthquake and tsunami and the later flooding.

Tohoku noted that its power generation and distribution facilities along the coast "suffered extensive and serious damage" from the March 2011 earthquake and tsunami. In addition, heavy rain in July 2011 damaged 29 of its hydro plants. As a result, Tohoku said that its financial situation has continued to deteriorate significantly. The utility has reported losses for the past two consecutive financial years and expects a further loss in the current financial year.

Tohoku has three units at its Onagawa plant which automatically shut down during the earthquake. These have been ordered to remain off-line by the government. Meanwhile, the company has a single unit at its Higashidori plant which has not operated since it shut down in February 2011 for periodic inspections.

The utility worked out the rate increases based on its outlook for the next three financial years. This assumes that its Higashidori plant will restart in July 2015 and its Onagawa units will resume operation in or after 2016.

Tohoku is the fourth Japanese utility to request rate increases due to higher costs since March 2011. Tokyo Electric Power Co (Tepco) received approval from METI in July 2012 to increase its household rates by 8.5% and its industrial rates by an undisclosed amount. Kansai and Kyushu both applied in November 2012 to increase their rates. Kansai wants to increase its household rates by 11.9% and its industrial rates by 19.2%, while Kyushu hopes to raise its household rates by 8.5% and its industrial rates by 14.2%.

Other Japanese utilities operating nuclear power plants, such as Shikoku Electric and Hokkaido Electric, are also expected to apply for rate increases soon. All of Japan's utilities have been increasing their imports of fossil fuels to help them continue to meet electricity demand. Making up a large part of replacement power is LNG, consumption of which increased some 24% over the past two financial years.

Researched and written
by World Nuclear News