Not this summer

April 17, 2013

Gov't may not request power-saving across Japan this summer

http://mainichi.jp/english/english/newsselect/news/20130417p2a00m0na014000c.html

The government is considering forgoing asking companies and households throughout Japan to cut electricity use this summer because of the prospects of stable and sufficient power supply meeting the season's expected peak electricity demand.

Entrenched public awareness regarding energy-saving measures and enhanced thermal power generation are expected to ensure sufficient electricity supply this summer. Following the Great East Japan Earthquake in March 2011, the government issued energy-saving requests to companies and households across the country with numerical targets for the summer and winter seasons of 2011 and 2012.

This summer, however, the government will likely be able to avoid issuing such requests even for such regions as Kansai and Kyushu that were more dependent on nuclear power than other regions. The government has estimated that fuel costs will increase by 3.8 trillion yen in fiscal 2013 from the fiscal 2010 level registered before the earthquake disaster. On the backdrop of a weaker yen against the U.S. dollar and other foreign currencies, the fuel cost is likely to further increase by 700 billion yen in fiscal 2013 from the fiscal 2012 level.

At a meeting of the Electric Power Supply and Demand Verification Subcommittee held on the morning of April 17, the Ministry of Economy, Trade and Industry presented a report on the prospect of supply and demand for energy for this summer.

The so-called "supply reserve ratio," the indicator of surplus energy supply above the assumed maximum energy demand, stands at an average of 6.3 percent. The ratio for August this year stands at 3 percent for Kansai and 3.1 percent for Kyushu -- slightly above the 3 percent that is considered necessary to ensure stably energy supply. But the figures are based on the same level of power demand as what was registered in the scorching summer of 2010, and power companies will presumably be able to make up for shortfalls by securing electricity from other utility firms.

Therefore, the government judged that it would not need to issue energy-saving requests with numerical targets.

Electricity costs were calculated on the assumption that power to be generated by nuclear reactors will remain at the same level as that of fiscal 2012 and the yen will be traded at 100 yen to the U.S. dollar. As for the estimated fuel costs for fiscal 2013, the industry ministry expects the figure to increase by 3.8 trillion yen from the fiscal 2010 level. Because import prices are set to rise due to the weaker yen, the margin of increase in fuel costs in fiscal 2013 from the fiscal 2010 level is expected to expand more than 20 percent from the increase of 3.1 trillion yen for fiscal 2012.

The breakdown of the margins of increase in fuel cost are as follows: Thermal power generation -- 2.4 trillion yen for oil; 1.6 trillion yen for liquefied natural gas (LNG); and 0.1 trillion yen for coal. Meanwhile, the fuel cost for nuclear power generation is set to drop by 0.3 trillion yen.

The report says that the government will urge power companies to cut down on fuel costs. It then says, "It will be unavoidable for the public to bear a certain level (of extra costs)." In the report, the industry minister sought public understanding of higher power charges because of the system of passing on higher fuel costs to electricity charges.

The Electric Power Supply and Demand Verification Subcommittee is set to compile a report at its next meeting, and the government plans to make a final decision on energy-saving measures for the summer by the end of this month.