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24 December, 2014

Kansai Electric Power to Raise Power Rates Again — Restarts Are Key

Having reluctantly determined that another increase in power rates is unavoidable, Japan’s Kansai Electric Power Co. (Kansai EP) announced on December 17 that it would begin preparations for the necessary legal procedures.

At a special press conference, President Makoto Yagi said that Kansai EP would raise rates again in April 2015. He said that the magnitude of the hike and other details were under consideration. It appears, however, that the company is eyeing a raise on the order of somewhat more than 10% for households.

It will submit an application for permission to the Ministry of Economy, Trade and Industry (METI) as early as the end of 2014. The result is expected to be a large blow to household users and industries in the Kansai area.

President Yagi explained the reason for the price hike, saying that the company’s income and expenditure situation was severe, and that, if it continued, it could threaten the survival of the company. The cost of fuel for thermal power as a result of the suspended operation of the country’s nuclear power plants (NPPs) has remained at a high level and Kansai EP’s earnings have continued to deteriorate.

In light of that, the company has asked consumers for their understanding of a “temporary measure” until the nuclear plants are restarted. Power rates for heavy users, such as industries and factories, will also be raised.

Kansai EP’s Takahama-3 and -4 NPPs (Fukui Prefecture) are expected to be the second set of reactors in Japan to be restarted after the Sendai NPS, owned and operated by the Kyushu Electric Power Co. If so, and if Kansai EP’s Ohi-3 and -4 NPPs (also in Fukui Prefecture) are also able to restart quickly, the company will limit the markup at that time, or reduce the rates.

The two reactors at the Takahama station actually passed safety examinations by the Nuclear Regulation Authority (NRA) on December 17, and President Yagi has expressed high expectations for their early restart.

Very reluctantly, Kansai EP previously raised its household rates in May 2013. As a result of operating many thermal power plants, however, the costs of fuel have remained high, and the power company is certain to finish fiscal year 2014 (ending March 31, 2015) in the red for the fourth consecutive year.

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