OSAKA -- Kansai Electric Power will lower the base rates for residential and commercial users as early as April, passing cost savings on to customers as some of its nuclear power reactors return to service.
Shifting prices of crude oil, natural gas and other fuels are automatically factored into monthly bills. But the Osaka-based utility's pending cuts, averaging around 5% for residential customers, take into account overall operating costs, marking the first reduction of base rates in roughly eight years.
Seven of Japan's 10 major electrical utilities have hiked base rates since the Fukushima nuclear disaster in March 2011, which resulted in the shutdown of all of Japan's nuclear reactors. Kansai Electric, which is particularly reliant on nuclear power, in May 2013 raised residential rates by 9.75% on average. The utility was forced to hike prices a second time between June and October 2015, by 8.36%.
Kansai Electric's rate as of February will be the highest in the country, with the standard household paying 7,899 yen ($66.71). The utility on Jan. 15 announced new rate plans, effective in April, letting high-use households pay up to 5% less than now. But the prices are still high relative to those offered by new entrants. The upcoming reductions are designed to keep the utility competitive after the power retail market is fully deregulated in April. Under the latest fee schedule, high-use households will be able to trim their bills by as much as 10%.
Back on stable footing
On Monday, the utility notified Japan's Nuclear Regulation Authority that it plans to restart the No. 3 reactor at its Takahama nuclear plant in Fukui Prefecture as soon as Friday. The plant will be the second site in Japan to come back online after the regulator imposed new, stricter safety standards in 2013, following the restart of two reactors at Kyushu Electric Power's Sendai station in Kagoshima Prefecture last year. Loading of nuclear fuel into the No. 4 reactor at the Takahama plant is also set to begin Sunday.
Bringing the two Takahama reactors back online is expected to boost Kansai Electric's operating profit by 144 billion yen annually. The utility sees both reactors returning to full power as soon as the end of March, and will submit its fee changes to the government in early April. Residential rates would fall around 4-5%. The new fees may not take effect until May 1, as the company plans to devote a good deal of time to explaining the changes to customers.
The utility intends to cut rates further if two reactors at its Oi plant, also in Fukui, are restarted. Those reactors are entering the final stages of a review by the NRA. Kansai Electric aims to have them running again by the end of fiscal 2016, and is beefing up a team engaged in the review process.
Kyushu Electric, meanwhile, has seen a limited earnings boost from its reactor restarts, and is not yet moving to reduce power rates. The utility will consider lowering prices if reactors at its plant in Saga Prefecture come online again.
Such companies as Tokyo Gas, Osaka Gas and Jupiter Telecommunications are entering the power retailing market. Kansai Electric's latest round of cuts looks likely to only intensify the battle for market share as those new competitors respond with low rates of their own.