Utilities’ household power rate hikes OK’d


The government on Tuesday approved rate hikes on household electricity supplied by Kansai Electric Power Co. and Kyushu Electric Power Co.

The utilities say they need the increases, which will take effect May 1, to pay for surging fuel costs at their thermal power plants, which are running full bore to make up for the loss of nuclear energy in due to the Fukushima crisis.

Minister of Economy, Trade and Industry Toshimitsu Motegi endorsed an average increase of 9.75 percent for Kansai Electric and 6.23 percent for Kyushu Electric.

The utilities applied for the household rate hikes in November. Kansai Electric asked for an average increase of 11.88 percent while Kansai Electric sought an average of 8.51 percent.

The government then ordered the two firms to trim their requests by about 2 percentage points, saying they could find ways to reduce the costs that they wanted their customers to pay for.

Utilities are allowed to pass onto household customers the costs of providing power, such as fuel and personnel expenses, and a certain level of “business returns,” which are used for such purposes as interest payments. But they need METI’s approval.

They don’t need such permission to raise their rates for corporate users. Kepco and Kyushu Electric hiked those rates Monday.

Kepco to get U.S. LNG

Kansai Electric Power Co. has reached a basic agreement with Sumitomo Corp. to import around 800,000 tons of liquefied natural gas produced from U.S. shale gas.

The deal, announced Monday, will enable the companies to import LNG at a lower cost for about 20 years starting around 2017, following approval by the U.S. government.

Sumitomo, along with Tokyo Gas Co., is participating in the Cove Point LNG Project in the state of Maryland.

Sumitomo has signed a contract with the project owner, Dominion Cove Point LNG, to liquefy around 2.3 million tons of natural gas per year, of which about 1.4 million tons will be sold to Tokyo Gas.