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Two utilities to be told to trim rate hikes

Kepco, Kyushu Electric face call to pare 2 points, cut their costs

Kyodo

The government plans to order two regional utilities to trim their planned household electricity rate hikes, possibly by about 2 percentage points, believing the firms can cut costs further, sources said Wednesday.

The move came after the government, together with energy experts, studied the plan submitted by Kansai Electric Power Co. to hike rates by an average of 11.88 percent and Kyushu Electric Power Co.’s plan for an 8.51 percent increase from April 1.

Considering the procedures necessary to revise the plans under the envisioned government order, the rate hikes are expected to take effect from May 1.

Many utilities, including Kepco and Kyushu Electric, are seeing business conditions deteriorate due to rising fuel costs from running thermal power plants to compensate for the loss of nuclear energy because of the meltdown disaster at Tokyo Electric Power Co.’s Fukushima No. 1 complex.

Currently, only two reactors remain online, both run by Kepco.

Utilities are allowed to pass onto households the costs for providing power, such as fuel and personnel expenses, and a certain level of “business returns” that are used for such purposes as interest payments. But they need to win the approval of the economy, trade and industry minister to raise rates.

As for electricity charges for corporate users, an area that does not require government approval, Kepco plans to hike rates by an average of 19.23 percent and Kyushu Electric by 14.22 percent from April 1. But the percentages are likely to be slashed in line with the expected revision of their household rate hike plans.

Energy mix clarity urged

Four external members of the government’s key economic panel have stressed the need to draw up a vision for the share of nuclear power and other energy sources in Japan “as quickly as possible,” noting that clarifying the future energy mix will enable companies to work out their investment plans.

The call came Tuesday shortly after the Ministry of Economy, Trade and Industry resumed its rethink of the country’s new medium- to long-term energy plan in light of the Fukushima No. 1 nuclear plant disaster.

Although Prime Minister Shinzo Abe’s government has said it plans to spend up to 10 years in determining the most appropriate future energy mix, the proposal from the nongovernmental members may affect the ongoing discussions under METI.

The four include Toshiba Corp. President Norio Sasaki and Motoshige Ito, an economics professor in the University of Tokyo’s graduate school.

Economic revitalization minister Akira Amari told reporters after the meeting of the Council on Economic and Fiscal Policy that he expects METI Minister Toshimitsu Motegi to consider whether it is possible to move up the schedule for setting the energy mix.

The government has set a 10-year time frame because it needs time to weigh the potential of renewable energy sources, while assuming it will take three years until it becomes clear which nuclear reactors in the country are safe to operate, according to Amari.