Japan to Experience Power Shortages This Summer, Panel Says

Kansai Electric Power Co. (9503) and two other Japanese utilities may have power shortages this summer without supplies from nuclear reactors, a government panel said.

Kansai Electric, the utility most dependent on nuclear power, may face the biggest shortage of 14.9 percent, the independent committee said in a draft report published May 12. Kyushu Electric Power Co. and Hokkaido Electric Power Co. may have shortages of 2.2 percent and 1.9 percent, the report said.

Japan is reviewing its electricity outlook as it heads toward a nuclear-free summer while debating the first restart of atomic reactors idled for regular safety checks since the Fukushima disaster in March last year. Based on the conclusion of the panel, the government will decide on power-saving measures, which may include rolling blackouts.

Kansai Electric’s service area may face a more severe power shortage than the deficit forecast in Tokyo Electric’s region last year, according to the report. In addition to the Kansai region, power supply and demand are expected to be tight in Hokkaido, Shikoku and Kyushu.

Utilities should have at least 3 percent surplus capacity to deal with potential demand spikes or accidents at power plants, the report said. Tokyo Electric Power Co. and four other utilities were estimated to meet the target, it said.

Power Saving

As part of measures to get through the summer, the government should set power-saving targets across the country, and utilities with excess capacity should supply electricity to others, the report said.

The government may ask western prefectures supplied by Chubu Electric Power Co., Hokuriku Electric Power Co. (9505), Chugoku Electric Power Co. and Shikoku Electric Power Co. to reduce power consumption by 5 percent, the Yomiuri newspaper reported May 12. Saved electricity may be supplied to the Kansai region, it said. Kansai accounts for about a fifth of Japan’s economy.

Users there may be asked to cut electricity consumption by as much as 20 percent, while those in Kyushu and Hokkaido may be requested to reduce 12 percent and as much as 8 percent, the Yomiuri said, without saying how it got the information.

All of Japan’s 50 reactors are now offline for maintenance or safety checks and none have been approved for restarts due to local opposition following the disaster. Utilities increased use of gas and oil-fired power plants to make up for the loss.

Even if power shortages during peak summer hours are averted, increased use of thermal power plants will drain Japan’s national wealth, the panel said.

Fuel costs at the nine regional utilities that operate nuclear plants may rise to as much as 7 trillion yen ($88 billion) in the year ending March 2013, from 5.9 trillion yen a year earlier, it said. The utilities spent about 3.6 trillion yen on fuel costs in the year ended March 2011, the report said.

The rising costs may mean households and companies end up facing higher electricity bills, it said.

Tokyo Electric, known as Tepco, submitted a request to the trade and industry ministry on May 11 to raise electricity rates for households by an average of 10.28 percent from July.

To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

Enlarge image

Japan to Experience Power Shortages This Summer

Tomohiro Ohsumi/Bloomberg

Pedestrians walk past neon signs in the Kitashinchi area of Osaka, Japan. Kansai Electric’s service area may face a more severe power shortage than the deficit forecast in Tokyo Electric’s region last year, according to the report.

Pedestrians walk past neon signs in the Kitashinchi area of Osaka, Japan. Kansai Electric’s service area may face a more severe power shortage than the deficit forecast in Tokyo Electric’s region last year, according to the report. Photographer: Tomohiro Ohsumi/Bloomberg

5:14

May 14 (Bloomberg) -- Penn Bowers, an analyst at CLSA Asia-Pacific Markets in Tokyo, talks about the prospects for power shortages in Japan this summer, the nation's power industry and the outlook for Tokyo Electric Power Co. Kansai Electric Power Co. and two other Japanese utilities may have power shortages this summer without supplies from nuclear reactors, a government panel said. Bowers speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)