Rates hike or restart?

 November 22, 2012

Utility may up rates beyond hike eyed for April

Kepco plans two reactor restarts

http://www.japantimes.co.jp/text/nn20121122x1.html

Kyodo

OSAKA — Kansai Electric Power Co. has presented to potential lenders a business plan that includes reactivating two reactors, in addition to the pair that were brought back online this summer, according to sources.

Kepco, one of the most nuclear-dependent of the nation's 10 utilities, aims to return to profitability in fiscal 2013 if it wins government approval to raise electricity rates in April and gets two more reactors fired up, the sources said Wednesday.

It wants to hike rates by an average of 10 to 15 percent for homes and 15 to 25 percent for businesses. Kepco says it also plans to streamline operations.

However, it remains to be seen if the utility can pull off the reactor plan because the government and the Nuclear Regulation Authority have not yet outlined a road map for bringing reactors back online after they were sidelined by the Fukushima crisis.

It did manage to get two of the reactors at its Oi power plant in Fukui Prefecture online in July following government-mandated "stress tests" quickly put in place after Fukushima.

If Kepco can't restart the reactors it's counting on, it could be forced to seek higher rate hikes.

Targeted for reactivation are units 3 and 4 at the Takahama power plant in Fukui Prefecture. In July, immediately after Kepco rebooted the two Oi reactors, President Makoto Yagi said, "we are thinking Takahama reactors 3 and 4 are most promising" for a next round of reactivation.

"We would like to hold discussions with the government with the view to giving top priority to reactivating them," he added.

The remark drew anger from Yukio Edano, head of the Ministry of Economy, Trade and Industry, and others in the government because it was made before the September inauguration of the NRA, which is aiming to draw up a new set of safety criteria by next July.

METI's Nuclear and Industrial Safety Agency, before it was disbanded, released the results of preliminary stress tests for the Takahama reactors. But an NRA official said, "safety will be judged under the new set of guidelines."

Kepco has 11 reactors, all in Fukui Prefecture, and derived 51 percent of its power supply from nuclear sources in fiscal 2010, before the Fukushima crisis.

Tokyo Electric Power Co. raised electricity rates for households by an average of 8.46 percent in September and is counting on further easing the pressure of fossil fuel costs on its bottom line by restarting reactors at its massive Kashiwazaki-Kariwa nuclear plant in Niigata in April.

But with no prospects for reactivation in sight, industry watchers are speculating another Tepco rate hike may loom.

Kepco posted a heavy ¥116.7 billion in consolidated net loss for the first half of this business year through Sept. 30 because of increased fuel costs for its nonnuclear power plants.

A Kepco official said that if the two Takahama reactors are rebooted, "fuel costs would be cut by around ¥160 billion per year."

Sharp Corp. said later Wednesday that its costs could grow by ¥1 billion to ¥2 billion annually if electricity rates are increased by 10 to 20 percent.

A senior Sharp official told reporters the company would be dealt a blow if Japan's second-largest power utility raises its rates, as Sharp's major production bases are located in and around Osaka.

The official said it is "difficult to transfer such large facilities," indicating the company would not move its plants outside the Kansai region to avoid rising costs.

The planned power rate hike has not been factored into Sharp's projected largest-ever group net loss of ¥450 billion for fiscal 2012, which ends next March 31, it said.