Japanese firms struggle with electricity rates

Some 90% of Japanese small- and medium-sized enterprises think their business would be adversely affected by any future increases in electricity prices, a survey by the Japan Chamber of Commerce and Industry (JCCI) has found. Restarting the country's nuclear power plants is seen as one way of reducing prices.

The JCCI conducted its survey between September 2013 and August 2014, during which time electricity rates averaged JPY 4.19 (3.5 US cents) per kWh, some 28.1% higher than that in the fiscal immediately following the March 2011 earthquake and tsunami (April 2011 to March 2012). For the average company, that increase represents an increased annual burden of about JPY 10 million ($84,000), JCCI said.

Two-thirds (67.2%) of the 335 respondents to the survey said they were struggling to bear current electricity costs and that only a rate of JPY 1 (0.8 US cents) or less would be acceptable.

When asked how they would cope with future electricity rate increases, 61% of companies said they would have to reduce their workforce and cut employee costs. In addition, almost 42% of respondents said they would have to postpone or reduce plans for expanding their facilities, or cut back on research and development activities. Only 10.2% of companies thought future rate hikes would not affect their business.

The JCCI said the results stress the urgency of "applying the brakes" on future electricity rate increases.

When asked about energy policy issues, the surveyed companies called for measures to hold down costs, such as formulating the official energy mix swiftly and restarting the operation of nuclear power plants with enhanced safety.

The publication of the JCCI's survey results on 22 January came the day after the results of a separate survey carried out at the start of the year by the Osaka Chamber of Commerce and Industry.

Just over 90% of the 243 companies that responded to that survey said they were soon approaching the limit of what they could do to conserve energy. Some of the respondents said that if power rates were increased again, they would consider buying their electricity from a company other than Kansai Electric Power Company, the regional electricity producer. In addition, those companies said they would take steps to cut costs and hold down wages.

Japan's entire fleet of 48 operable nuclear reactors has remained out of service following loss of confidence in Japan's nuclear safety arrangements after the Fukushima accident of 2011.

At the end of January, the Institute of Energy Economics, Japan (IEEJ) said that a scenario with 25% nuclear power would best suit Japan's policy goals. In the time to 2030 it would be cheaper than a non-nuclear scenario and would help the country return to a positive trade balance, it said.

Researched and written
by World Nuclear News