TOKYO -- Electricity costs at major Japanese companies are expected to rise 22% on average this fiscal year from fiscal 2010, or before the Fukushima Daiichi disaster in 2011 shut down the nation's nuclear reactors, according to a survey by The Nikkei.
The survey, taken in June and July, covered 43 manufacturers and 35 nonmanufacturers.
Seven utilities, including Tokyo Electric Power and Kansai Electric Power, hiked rates between April 2012 and April 2014. Ramped-up operations at fossil-fuel-powered facilities pushed up fuel costs, forcing them to pass on the expenses to customers.
The average price businesses paid per kilowatt-hour climbed 28% between fiscal 2010 and fiscal 2013, compared to a 19% increase for households, according to a government report.
Companies held costs down to some extent through such efforts as adopting power-saving measures and turning to in-house generation, as well as using less-expensive independent power providers.
The average amount of power purchased this fiscal year is expected to be 7% less than in fiscal 2010. Daiwa House Industry installed equipment to monitor power usage at factories and distribution centers, and department-store operator Takashimaya switched to LED lighting.
But it is difficult to absorb the rate hikes through improved efficiency alone. Asahi Kasei and NSK have each cut power usage by 10%, but their power costs still grew 30%.
Kyushu Electric Power's Sendai nuclear plant in Kagoshima Prefecture has cleared the Nuclear Regulation Authority's safety checks, but it is unclear how quickly Japan's reactors will be restarted. Hokkaido Electric Power plans to apply for another rate increase, and Kansai Electric is considering it as well.
The rate hikes already in place for businesses range from 7% to 17%. Hokkaido Electric is aiming for an increase in the high teens. Japanese businesses paid 9.9 trillion yen ($96 billion) in power costs last fiscal year, and a further 20% hike would tack on 2 trillion yen or so.
Starting in fiscal 2015, the government plans to gradually lower the effective corporate tax rate over several years to the 20% range from around 35% now. Each percentage-point decrease would lighten the load on businesses by around 500 billion yen, meaning a 20% hike in electricity rates would cancel out a 4% tax cut.
A 20% rate increase "would push down pretax profits at all Japanese businesses by 11.2% over three years," says Toshihiro Nagahama at Dai-ichi Life Research Institute.
As for the impact on the overall economy, "6.2 trillion yen would be lost from gross domestic product after three years," Nagahama says.