Japan Power Use Drops to 17-Year Low Amid Slump in Economy

  • Electricity demand falls 2.7% to 806 terawatt hours in 2015
  • Stagnant economy, high prices seen encouraging conservation

Power usage in Japan dropped last year to the lowest level since 1998 as households and businesses conserved electricity amid a stagnant economy and shrinking population.

The country consumed 806.03 terawatt hours of electricity from Japan’s 10 regional power utilities, down 2.7 percent from 2014, according to data released Friday by the Federation of Electric Power Companies of Japan.

The drop in demand by the world’s third-biggest economy highlights the difficulties facing Japan’s utilities. The total revenue of the country’s top three power generators will probably fall 5.5 percent this fiscal year, according to data compiled by Bloomberg. The nation’s declining population, along with the government’s efforts to boost electricity efficiency, will continue to pressure balance sheets.

Everything from household spending to industrial production and exports tumbled in December and the nation’s factory output in 2015 fell 0.8 percent, government data released Friday show. Japan’s population shrank the past seven years to 126.9 million, the smallest since 2000, according to estimates by the U.S. Census Bureau.

Fukushima Shock

Japan’s power utilities were forced to shut down all atomic reactors in the wake of the March 2011 Fukushima nuclear disaster and rely on more expensive imported fuels, leading to an increase in electricity rates.

With rolling blackouts rampant following the disaster, the need to taper demand increased. The government began a campaign called “Cool Biz” to cut air-conditioning power use at businesses and households. Consumers implemented numerous types of power-saving measures, such as idling of escalators and dimming train-station lights.

The average price of electricity from Tokyo Electric Power Co. is currently about 20 percent more than before Fukushima, according to data from the company. Prices in the Kanto area surrounding Japan’s capital fell 10 percent last year, slower than the 35 percent slump in Brent crude and the 22 percent drop in Newcastle coal prices in Australia.

“Continuing a trend started after the Great East Japan Earthquake, consumers are more conscious about conserving electricity, especially as rates rose,” Syusaku Nishikawa, a Tokyo-based analyst at Daiwa Securities Co., said by e-mail. “Another factor to the drop is the stagnation of domestic manufacturing.”

Kansai Electric Power Co. on Friday fired up the third nuclear reactor in Japan to clear post-Fukushima safety rules and overcome court challenges. The country’s 40 other operable reactors remain shut.

Demand in December from manufacturers, which makes up nearly half of the nation’s total consumption, fell for the 20th straight month from the previous year, according to the data from the FEPC. Overall electricity usage fell 6.3 percent last month to 63.6 terawatt hours compared with the same month a year ago.

For Tokyo Electric Power Co., the drop in power usage is eating away at revenue. Sales in the third quarter dropped about 14 percent to 1.37 trillion yen, according to calculations based on nine-month results released on Friday.

Ahead of full liberalization of the retail power sector in April, new entrants have almost doubled their share of electricity output in the last three years and now account for about 5 percent of Japan’s supply, cutting into the share of electricity sold by the 10 regional utilities.

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