Kansai Electric Seeks Tariff Increase on Rising Fuel Costs

Kansai Electric Power Co. wants to raise electricity rates for companies and households from April to cover rising fuel costs to run thermal power plants.

The utility, which supplies power to Japan’s second biggest metropolitan area, submitted a request to the government to raise rates for households by 11.88 percent. It plans to raise rates 19.23 percent for corporate customers, for which it doesn’t need approval, the company said in a statement today.

Kansai Electric had a record first-half loss of 117 billion yen ($1.4 billion) after the Fukushima disaster last year prompted shutdowns of nuclear reactors and forced the utility to import fuels for gas-, oil- and coal-fired plants.

Some Japanese manufactures including Panasonic Corp. (6752), which has headquarters in the Kansai region, have said they may move jobs and factories overseas to avoid higher production costs from energy bills.

The utility expects to have a net loss of 265 billion yen in the year ending March 2013, it said in a statement today. Previously, it didn’t provide a forecast, citing uncertainty over electricity demand and the restart of idled reactors.

Kansai Electric expects to restart No. 3 and No. 4 atomic units at its Takahama nuclear plant after July 2013, it said. The utility’s Ohi No. 3 and No. 4 reactors are currently the only operating reactors in Japan.

‘Strictly Assess’

The Ministry of Economy, Trade and Industry, which has the authority to approve or disapprove electricity rate increases for households, would “strictly assess” such a plan, if Kansai Electric makes the request, Industry Minister Yukio Edano said last week.

Kansai Electric shares rose 5.3 percent to 754 yen in Tokyo today, the highest close since July 18.

The utility plans to reduce annual costs by an average of 155.3 billion yen in the three years through March 2016, it said. The reduction will include cutting about 18 percent, or 34.5 billion yen, of labor bills.

Kansai Electric’s annual fossil fuel bills are expected to rise by an average of 568.9 billion yen in the next three years, compared with the level prior to the Fukushima disaster, it said.

The Japanese government trimmed Tokyo Electric Power Co.’s request to raise electricity rates for households to 8.47 percent from the requested 10.28 percent. The reduction may lower Tepco’s revenues by about 84 billion yen compared with the original plan, according to the utility.

“The government may not reduce Kansai Electric’s proposed rate increase as much as it did for Tepco” as the utility’s plan already includes substantial cost cuts, Koki Shiraishi, an analyst at Daiwa Securities Co., said by phone today.

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 editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net; Peter Langan at plangan@bloomberg.net

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