NAGOYA – Its revenues narrowed by the indefinite shutdown of its only nuclear plant, Chubu Electric Power Co. has signed a contract to acquire an 80 percent interest in Diamond Power Corp., a small electricity supplier affiliated with Mitsubishi Corp., on Oct. 1 and will consider selling electricity in eastern Japan to expand its earning potential in the future.
Chubu Electric, a regional utility serving the Nagoya region, is reeling from the high cost of fueling its fossil-fuel power stations while the Hamaoka Nuclear Power Station remains offline with no immediate prospect of a restart.
Chubu Electric is anticipating a consolidated net loss for the year through March 2014 for the third year in a row. The utility signed the deal Wednesday to acquire the stake in the power supplier.
Diamond Power buys excess power from utilities and factories equipped with their own power generators and sells electricity to office buildings, shopping malls and hospitals. It entered the electricity retail market after large-lot power sales were liberalized in March 2000.
It is unusual for a regional utility to buy into a power retailer. Similar moves may follow in the industry as other regional electric companies are also hit by high fuel costs while their nuclear plants remain offline amid the Fukushima nuclear crisis.
In a related move, Mitsubishi, Nippon Paper Industries Co. and Chubu Electric will jointly construct a coal-fired thermal power plant in Fuji, Shizuoka Prefecture, within the area served by Tokyo Electric Power Co., the utility said Wednesday.
The electricity produced at the new plant will be bought by Diamond Power.
Mitsubishi, Nippon Paper and Chubu Electric plan to set up a joint firm as early as this fall to start operating the plant, to be built at a total expense of ¥25 billion, in 2016, Chubu Electric said.
The joint firm will be about 70 percent owned by Mitsubishi, 20 percent by Nippon Paper and 10 percent by Chubu Electric, the utility said.