Japan energy

Utilities face 1.5 trillion yen in losses as fuel costs rise

Japan’s 10 regional electric utilities are projecting a combined net loss of 1.5 trillion yen ($18.3 billion) for the fiscal year through March 31, as increased fuel costs for thermal power generation have hammered their bottom lines

Asahi,

31 March, 2012

Only Okinawa Electric Power Co., which does not operate nuclear power plants, is expected to post a net profit.

Six utilities--serving the Kansai, Tohoku, Kyushu, Chubu, Shikoku and Hokuriku regions--are forecasting their largest net losses on record.

Electric power companies have been unable to restart nuclear reactors shut down for regular maintenance since the Fukushima No. 1 nuclear power plant was crippled by the Great East Japan Earthquake and tsunami on March 11 last year.

Fuel costs have soared as the companies switched to thermal generation to make up for the lost capacity at nuclear power plants.

Kansai Electric Power Co. projects a group net loss of 253 billion yen for fiscal 2011, compared with a profit of 123 billion yen the previous year.

The company estimates that fuel costs for thermal generation have shot up 80 percent year on year to 700 billion yen. It relied on nuclear power for more than half of its generation volume in fiscal 2010.

Kyushu Electric Power Co. forecasts a group net loss of 170 billion yen against a profit of 29 billion yen in fiscal 2010.

It estimates that fuel costs, combined with expenses for electricity procured from other utilities, have increased by about 300 billion yen from the previous year.

Hokuriku Electric Power Co., which expects a group net loss of 6 billion yen, said fuel costs have almost doubled to 144 billion yen from fiscal 2010.

Tohoku Electric Power Co. said its group net loss will widen to 250 billion yen from 34 billion yen in fiscal 2010 due to recovery costs for power plants damaged by the Great East Japan Earthquake.

Tokyo Electric Power Co., operator of the damaged Fukushima No. 1 nuclear power plant, expects a group net loss of 695 billion yen, the largest among the nine regional electric utilities, following the loss of 1.25 trillion yen in fiscal 2010.

TEPCO and Tohoku Electric, which both suffered substantial damage from the disaster, will not pay dividends to shareholders.

Kyushu Electric will cut its annual dividend to 50 yen from 60 yen it had paid since fiscal 2004.