Shikoku joins rate hikers

A fifth Japanese nuclear utility has moved to raise its electricity tariffs in order to accommodate the cost of soaring fossil fuel imports. Shikoku Electric Power company intends to increase household rates by 11% and commercial rates by 17.5%.

Shikoku lodged the application to raise household rates with the Ministry of Economy Trade and Industry (METI) on 20 February. It is the first time the utility has moved to up the tariff in over 33 years, a decision necessitated by the idling of three reactors at its Ikata nuclear power plant following the March 2011 Fukushima nuclear accident. As with all other Japanese nuclear utilites, Shikoku has had to dramatically increase its reliance on imported fossil fuel to cover lost nuclear generation. The company expects liquified natural gas (LNG) costs to almost double out to 2015, with estimated expenditure per year up ¥156 billion ($1.7 billion) on the ¥178 billion ($1.9 billion) recorded in 2008. Coal is expected to cost an extra ¥37 billion per year ($400 million). The company has also suffered a reduction in its electricity exports and has had to earmark some yen for future Ikata upgrades.

Government approval is required for a Japanese utility to change tariffs in the country's regulated household electricity market, but no such approval is needed for the commercial rates. Shikoku's application serves only as notice of this increase which will take place on 1 July this year. If these increases are not implemented then the company is projecting a loss of ¥76 billion ($815 million) - the greatest in its history.

A draft version of the new Japanese safety standards includes potentially costly features - such as manual valve controls, filtered vents, passive hydrogen recombiner and a backup control rooms in case the facility is compromised by an aircraft impact.

In reaction to the Fukushima accident all but two of Japan's 50 operational reactors have remained offline as utilities await government and regulatory approval to restart. This is now contingent upon the publishing of new operational requirements which are expected to come in July, however there is still no clear time frame for the restart of individual reactors which will need to be approved case by case.

The costs of the lost nuclear generation have been felt around the country, which experienced its second year in a row of trade deficit during 2012 largely due to increased fossil imports. These have gone up by approximately ¥2.5 trillion ($30 billion) per year.

One after another Japanese utilities have been forced to raise their prices. Tokyo Electric Power Co (Tepco) received approval from METI in July 2012 to increase its household rates by 8.5% and its industrial rates by an undisclosed amount. Kansai and Kyushu both applied in November 2012 to increase their rates. Kansai wants to increase its household rates by 11.9% and its industrial rates by 19.2%, while Kyushu hopes to raise its household rates by 8.5% and its industrial rates by 14.2%. Tohoku joined the list just a week ago applying for a 11.4% increase in household tariffs and a 17.7% increase in industrial tariffs.