Osaka utility cutting power prices for first time since Fukushima
Kansai Electric will pass on cost savings from restarting nuclear reactors
OSAKA -- Kansai Electric Power will reduce rates Aug. 1 as reactivating nuclear reactors brings fuel costs down, aiming to win back customers lost after prices rose following the 2011 Fukushima disaster
The Osaka-area utility becomes the first regional power company in Japan to lower its prices since the reactor meltdowns six years ago.
The size of the reductions has yet to be determined, President Shigeki Iwane explained at a news conference Monday. The region "needs a rate cut as soon as possible," Iwane said, noting that electricity usage rises in August as air conditioners kick in.
One reactor at the utility's Takahama nuclear power plant in Fukui Prefecture resumed commercial operation Friday. A second is set to follow on July 4, and specific rate changes are to be announced by July 22. These restarts are seen slashing around 7 billion yen ($62.7 million) from Kansai Electric's monthly fuel bill.
All of Japan's nuclear reactors went idle following the March 2011 meltdowns at Tokyo Electric Power Co. Holdings' Fukushima Daiichi plant, forcing utilities to rely more on fossil fuels. Kansai Electric was hit particularly hard, given its high dependence on nuclear output compared with other regional utilities.
After two rounds of rate hikes to compensate for higher fuel costs, Kansai Electric's standard residential rate became the highest among those operating on Japan's main island of Honshu. Then in April 2016, when the liberalization of Japan's retail power market allowed customers to buy from producers other than these former regional monopolies, users fled to new rivals such as Osaka Gas, resulting in the loss of 720,000 contracts over the course of a year. Kansai Electric sold less power in volume terms in fiscal 2016 than hitherto smaller Chubu Electric Power.
By announcing the planned cuts this far in advance, Kansai Electric hopes to keep current customers in their contracts. The new rates "will benefit all our customers in the Kansai area," the company said, referring to the region including Osaka and Kyoto. Both residential and high-volume business customers should see prices drop. But the utility has only so much cost savings to pass on, and will likely be unable to undercut rivals sharply.
Japanese electric rates can fluctuate with fossil fuel costs, but this marks the first reduction by a big utility since the disaster. No others seem poised to follow suit. Shikoku Electric Power brought one nuclear reactor at its Ikata plant back online last year, but has no plan to cut rates -- likely because it faces less competition than Kansai Electric in the freed-up retail market. Nor does Kyushu Electric Power plan to lower prices when it reactivates two reactors at its Genkai plant as soon as this fall. The restarts are already priced into its current rates, according to the company.
The real question is what ailing Tepco will do in this regard. If the utility's Kashiwazaki-Kariwa nuclear plant -- Japan's largest -- comes back online, rate cuts would be within the realm of possibility. But local opposition to such a restart remains entrenched. Similarly, other regional utilities such as Nagoya-based Chubu Electric have no clear plans to restart idled reactors. Any cost savings that nuclear power could provide utilities are likely to take time to benefit Japanese households broadly.