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A panel of the Natural Resources and Energy Agency on Wednesday questioned executives from Kansai Electric Power Co (KEPCO) and Kyushu Electric Co on their applications to increase electricity rates for both households and corporate users next April.
Both utilities claimed that without nuclear power, they will have to hike rates. KEPCO is seeking a rate increase of 11.88% for household users, which would mean an average 599 yen extra per month, and a hike of 19.23% for large corporate users, Fuji TV reported. Kyushu Electric has applied for an increase of 8.51% for households.
A KEPCO official said the utility had no choice but to apply for a rate increase because all but two of its nuclear reactors are offline. He said fuel costs have surged due to the utility's switch to geothermal power, and the company faces a shortage in operating revenue.
The Ministry of Economy, Trade and Industry has instructed all utilities to streamline their operations before it will approve rate hikes.
KEPCO said it will implement salary cuts of 16% for all employees and sell off some assets worth 7.5 billion yen. Kyushu Electric said it hopes to raise 14 billion yen by selling various facilities.
© Japan Today
9 Comments
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basroil
There's not much questioning to be done. KEPCO and the other companies are spending extra trillions of yen a year in fuel costs alone. Add in lower revenue (less electricity sold), increased debts, and costs to add more capacity, and you'll see that they would actually need close to 25-30% increase just to be marginally profitable. Making these companies sell assets is just a push, by people never elected to power, to force these companies into financial ruin.
basroil
The fuel costs at the major power companies have tripled since 2010, and they had much more power use then! Check the financial reports and you will see that the fuel costs alone make up the largest burden, and that fuel cost cannot be reduced by magical anti-trust forces, and in fact a larger trust would be able to drive down fuel costs much more than many tiny companies.
basroil
Tepco and Kepco spend 54000JPY/kl of crude oil (2012 Fall prices). That is exactly the international futures market value for TOMOC crude oil, and actually CHEAPER than Brent crude!
Of course, if people actually did the calculations, which are perfectly doable from the financial reports, they can see that the price of fuel has nearly bankrupted all the major companies (which they avoid though offloading assets, but those add more costs at the end of the day, especially now that they will be selling parts of their crude processing, which offset costs because processing is very profitable).
basroil
Correction TOCOM crude.
They really need to put an edit system in place.
basroil
Japan has lower power rates than many other countries, especially those that like Japan has a bit of coal but not currently using it's full nuclear potential.