Last week, the Tohoku Electric Power Company applied to the Japanese government to raise its electric rates by 11.4% for residential customers, to make up for the rising cost of fossil fuels needed in the wake of Japan's idling of its nuclear power plants. The utility also plans a rate hike of 17.7% for its commercial and industrial customers, but it does not need governmental approval to do so. These would be the first rate increases by Tohoku Electric in 33 years. The residential increase would have to be approved by Japan's Ministry of Economy Trade and Industry (METI).
Tohoku is now the fourth Japanese electric utility to request substantial rate increases since the forced idling of all Japanese nuclear power plants following the Tohoku earthquake in March 2011.
How bad could things get? Very bad, warns a senior member of Japan's ruling Liberal Democratic Party:
“The economy will eventually stall in terms of energy cost,” cautioned Hiroyuki Hosoda, executive acting secretary general of the LDP, in a speech reported by the Kyodo news service in The Mainichi. ”Power companies will face capital deficits in around three years if their reactors remain idled, and the basis of their existence will be affected.”Among other Japanese electric utilities:
His remarks echo those we reported recently from Nobuo Tanaka, a global associate with the Institute of Energy Economics, Japan (IEEJ), which advises Japan’s Ministry of Economy, Trade and Industry. Tanaka warned of potential “economic crisis or catastrophe” if the country fails to embrace nuclear power again.
* Tokyo Electric Power Co. (Tepco) received approval from METI in July 2012 to increase its household rates by 8.5% and its industrial rates by an undisclosed amount.
* Kansai Electric Power Co. applied in November 2012 to increase its household rates by 11.9% and its industrial rates by 19.2%.
* Kyushu Electric Power Co. also applied in November 2012 to raise its household rates by 8.5% and its industrial rates by 14.2%.
* Other electric utilities, such as Hokkaido Electric and Shikoku Electric, are expected to apply for rate increases soon.
Japan's electric utilities were hit hard by the earthquake of March 11, 2011, which caused a major accident at the Fukushima No. 1 nuclear plant. Subsequently the Japanese government instituted new regulations that effectively required a shutdown of all 56 nuclear reactors in Japan, including those that were undamaged by the quake. The switch to price-volatile fossil fuels, plus the need for substantial powerline maintenance following the earthquake, has put all of Japan's electric utilities in a major financial bind.
Last December, Japanese voters elected a pro-nuclear government led by the LDP’s Shinzo Abe, who has announced a review of the previous government’s intentions to completely phase out nuclear by 2040. It is not known if the current forced idling of nuclear plants will be lifted by the new government, or when.