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Electricity summer demand no problem - Was the restart of Oi reactors necessary?

September 8, 2012


INSIGHT: Utilities clamor for reactor restarts despite meeting summer demand







September 08, 2012


Electric power companies are becoming increasingly desperate to restart their nuclear plants to stay afloat, warning of rate hikes and blackouts if their reactors remain offline. But the utilities are ignoring the key question of whether nuclear energy is really needed to meet the nation’s power demand.

“Unless more nuclear plants are brought back online, our balance sheet will worsen, threatening a stable power supply,” Makoto Yagi, president of Kansai Electric Power Co., told a news conference on Sept. 7.

Yagi said the company will consider all possible options, suggesting a rate hike, if the shutdowns continue at nuclear plants.

The utility posted a net loss of 99.5 billion yen ($1.26 billion) in the April-June period, compared with a net profit of 34.4 billion yen a year earlier.

Despite public opposition, the government in July reactivated two reactors at Kansai Electric’s Oi nuclear power plant in Fukui Prefecture before electricity demand hit a peak in summer.

But Kansai Electric figures suggest that electricity demand could have been met without the Oi reactors running largely because of power savings by households and businesses.

Kansai Electric’s supply capacity was 11.8 percent higher than power demand on Aug. 3, when consumption peaked in the Kansai region.

If the Oi reactors had not been restarted, the margin would have fallen to 2.7 percent, below the 3-percent benchmark that utilities say is required to prepare for an emergency.

However, experts said Kansai Electric could meet demand if it secured electricity from other companies.

The peak demand in the Kansai region was 26.8 gigawatts on Aug. 3, and the Oi reactors supplied 2.4 gigawatts. But Kansai Electric and other utilities in western Japan, which use the same frequency, had a combined surplus capacity exceeding 9 gigawatts, according to the energy strategy council of the Osaka prefectural and municipal governments.

“It was highly likely that Kansai Electric could do without any reactors online, given that (households and businesses) saved power even after the Oi reactors were restarted,” said Kazuhiro Ueta, a professor of environmental economics at Kyoto University, who chairs the panel.

“We must analyze how much power-saving efforts have become part of the daily lifestyle and discuss whether nuclear plants are necessary based on the finding.”

Ueta's panel has called for suspending the Oi reactors again after summer.

The government’s power-saving campaign ended in the Kansai, Shikoku and Kyushu regions on Sept. 7. Of the 50 nuclear reactors in Japan, only the Oi reactors are in operation.

In the Kansai region, power usage was cut by 11.1 percent from two years earlier, exceeding the target of at least 10 percent. Consumption fell 9.5 percent in Kyushu, largely in line with the 10-percent target, and 8.3 percent in Shikoku, above the 5-percent target.

But electric power companies continue to lobby for restarting nuclear reactors, saying their very survival is at stake.

“We will reach a dead end in a few years,” a senior Kansai Electric official said. “We will not be able to cover the snowballing costs even if personnel expenses are slashed to zero.”

In addition to Kansai Electric, seven regional electric utilities suffered net losses in the April-June period.

Kyushu Electric Power Co.’s net loss ballooned to 101 billion yen from 8 billion yen a year earlier on increased fuel costs for thermal power generation.

The company will skip a midterm dividend for the first time in 32 years as the net loss for the April-September period will reach 165 billion yen.

Michiaki Uriu, president of Kyushu Electric, said the company will consider a rate hike unless nuclear reactors are restarted.

“Electric utilities are eager to restart nuclear reactors for the sake of their operations,” said Takumi Fujinami, a senior researcher at Japan Research Institute. “A rate hike will likely be unavoidable if nuclear reactors remain offline.”

But power companies themselves would likely have to pay a price for increasing their electricity rates.

The government will demand the companies streamline operations if it approves a rate hike for household customers.

Tokyo Electric Power Co., operator of the stricken Fukushima No. 1 nuclear power plant, raised rates for household users by an average of 8.46 percent in September.

The company was forced to lower the average annual income of employees by more than 20 percent from 7 million yen to 5.5 million yen. It also reviewed its fringe benefits and fuel procurement costs.

A senior Kansai Electric official said the company is loath to follow in TEPCO’s footsteps.

“Like TEPCO, we would be made a wreck of by politicians if we raised electricity charges,” the official said.

The government estimates that a household that pays 9,900 yen a month for electricity bill may have to shoulder more than 20,000 yen if nuclear power generation is abolished in 2030.



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