Rush is on to raise power rates

Moves to raise electricity rates are spreading among the nation’s major power companies. In September, Tokyo Electric Power Co. raised fees for electricity used by households. Following this, Kansai Electric Power Co. and Kyushu Electric Power Co. expressed the desire to raise their electricity charges. Hokkaido Electric Power Co., Tohoku Electric Power Co. and Shikoku Electric Power Co. do not rule out the possibility of raising their charges.

Behind this situation is the suspension of nuclear power plant operations following the 3/11 triple disasters. The increase in the costs of importing fuel for thermal power plants, which are substituting for nuclear power plants kept offline, has caused power companies’ business performance to deteriorate.

Eight of the nation’s 10 major power companies — excepting Hokuriki Electric Power Co. and Okinawa Electric Power Co. — suffered net losses in a half-year business period through the end of September 2012.

If power companies file applications for rate increases, the government should strictly scrutinize their cost structure in a transparent manner. It should call on them to reduce salaries and welfare benefits for employees because, in most cases, average salaries exceed those reported among Japan’s major companies.

Fuel costs for thermal power plants borne by the nation’s major power companies jumped some 40 percent from the April-September 2011 period to some ¥3.5 trillion. Business results deteriorated badly among power companies that had a relatively high reliance on nuclear power generation before 3/11.

Chubu Electric Power Co., Hokuriku Electric Power Co. and Chugoku Electric Power Co., whose nuclear reliance was relatively small, and Okinawa Electric Power Co., which has no nuclear power plants, are not expected to seek rate hikes.

Power companies think that if their nuclear power plants are put online again, they can avoid raising electricity charges. But it is impossible to restart the nuclear power plants at least until July 2013, when the Nuclear Regulatory Authority is expected to come up with new, post-Fukushima safety standards.

There are other factors that contribute to pushing up electricity fees. In July, a system started under which power companies must buy power generated by renewable electricity sources at fixed prices. They are allowed to pass these costs on to consumers.

In October, an environment tax imposed on all forms of fossil fuel was introduced. This tax is also passed on to consumers. It will be necessary to change the current electricity fee system under which power companies are allowed to pass increased costs on to consumers in order to secure a profit margin.

The government should work out ways to increase competition in the power industry by making it easier and cheaper for small-scale power generation companies to use power transmission lines owned by major power companies, which enjoy regional monopoly.