information about Fukushima published in English in Japanese media info publiée en anglais dans la presse japonaise
21 Février 2013
February 21, 2013
As more utility companies across the nation have applied to the government for approval to increase electricity charges for households, consumers are likely to face further burdens. However, the government has yet to formulate measures to curb the rate hikes.
On Wednesday, Shikoku Electric Power Co. asked the government for approval, following similar steps taken by Kansai, Kyushu and Tohoku electric power companies.
Tokyo Electric Power Co. already raised its rate last year, while Hokkaido Electric Power Co. is mulling a price hike.
If the six utility firms raise rates, household users and company-based large-lot users are expected to face increased burdens of about 600 billion yen and 960 billion yen a year, respectively, resulting in economic hardship.
Currently many nuclear power plants in the nation are idled, leading the power companies to incur more fuel costs, which may further contribute to a price hike.
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Personnel costs key
On Wednesday, the Economy, Trade and Industry Ministry's expert panel to examine electricity rates held its eighth meeting to discuss requests by KEPCO and Kyuden to increase rates from April.
The screening process of the requests by the rate examination panel, headed by Chuo University's Chuo Law School Prof. Junji Annen, is in the final stage.
At a press conference after Tuesday's Cabinet meeting, Economy, Trade and Industry Minister Toshimitsu Motegi expressed his intention to compile measures to curb the rate hikes.
"Based on the conclusion [by the panel], I'd like to come up with measures [to deal with their requests]," the minister said.
The salaries of the utility firms' employees are included in the initial costs of power rate payment, so the monetary value of the labor is one of the most important aspects in the screening of the companies' rate hike requests.
KEPCO cut the average annual income of its employees by 16 percent to 6.64 million yen from the current 7.9 million yen to apply for the rate hike. Similarly, Kyuden also reduced the average annual income of its employees by 21 percent to 6.5 million yen from the current 8.26 million yen.
Past presidents of power companies often tend to assume advisory posts, and their salaries were also included as necessary expenses.
In the debate at the panel's meetings, the experts raised concern about the practice.
However, in the cases of both KEPCO and Kyuden, personnel costs account for only about 1 percent of overall costs.
In reality, the reduction of managerial salaries has a limited effect on scaling down the margin of rate hikes.
The major focus in the screening of rate hike calculations will be the extent to which the government would approve the ratio of fuel costs, which account for 30 percent of overall costs.
The panel is expected to urge the companies to work harder to reduce fuel procurement costs.
However, as fuel costs are fixed under relatively long-term contracts in many cases, a ministry official pointed out the difficulty in drastically reducing the margin of the rate hike.
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60 bil. yen increase to hit families
According to an estimate compiled by Koya Miyamae, economist at SMBC Nikko Securities Inc., households will see an increase in their electricity rates of about 600 billion yen in the period of a year, while businesses will suffer a 960 billion yen increase in the same period in the service areas of the six utilities, including TEPCO, KEPCO and Kyuden, along with those of Tohoku Electric and Shikoku Electric, which planned to raise their rates in July, and of Hokkaido Electric, which will consider whether to raise its rate by the end of the fiscal year.
However, the rates may be further hiked, as the four utilities that have already increased rates or applied for the approval to do so, predicated their plans on the assumption that idled nuclear power plants would resume operation, a prospect which is now in doubt.
TEPCO planned to restart operations at the No. 1 reactor of its Kashiwazaki-Kariwa plant in Niigata Prefecture in April. However, as the Nuclear Regulation Authority is to compile new safety standards for nuclear plants in July, realization of an April resumption has become impossible.
A restart of KEPCO and Kyuden's reactors in July is likewise doubtful.
If the reactor restarts are greatly delayed, fuel costs for substitute thermal power generation would increase, making the prospect of a rate hike by utilities more real.
Chubu Electric Power Co., Chugoku Electric Power Co. and Hokuriku Electric Power Co. said they did not intend to raise their rates at the moment. However, Chugoku Electric President Tomohide Karita said, "We would be forced [to raise the rate] if the reactors are not able to be restarted within fiscal 2013."
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