Xinhua News Agency, Tokyo, October 24 (International Observation) Japan's electricity price increase may affect residents' lives
Xinhua News Agency reporter Liu Chunyan
Rising fuel costs this year have led to recent increases in electricity prices in Japan.
Japanese media predict that the residential electricity prices of Japan's four major power companies will rise by an average of 13% in November compared with the beginning of this year.
Observers said that high electricity prices this winter will affect the lives of residents and will continue for some time.
"Nihon Keizai Shimbun" recently reported that compared with the beginning of the year, Tokyo Electric Power, Kansai Electric Power, Chubu Electric Power, and Kyushu Electric Power Company are expected to see a significant increase in residential electricity prices in November. Tokyo Electric Power will have the largest increase, which will reach 17%.
Observers believe that Japan's electricity supply relies heavily on thermal power generation, and the continued rise in natural gas and coal prices will inevitably be transmitted to electricity prices.
There is a high probability that Japan will face high electricity prices this winter, which will increase the burden on residents or inhibit consumption recovery.
Media and experts generally believe that since this year, the spot price of liquefied natural gas has risen to more than ten times that of the same period last year.
Although approximately 80% of the natural gas required for power generation by major Japanese power companies have long-term contracts, and the direct impact of price increases in the spot market is relatively small, power companies still face huge cost pressures.
According to Japan's current electricity price linkage increase mechanism, the average increase in fuel prices will be reflected in electricity prices.
Ken Koyama, the chief researcher of the Institute of Energy Economics of Japan, analyzed that because the price of natural gas and crude oil in Japan are linked and lagging in formation, the real fuel price increase is still in the future.
According to media projections, Tokyo Electric Power's December residential electricity price will increase by 18% year-on-year, which will be the largest increase since Japan's electric power retail in 2016 was fully marketized.
The power generation situation of Japan's four major power companies is different.
In the current context of rising fuel prices, the higher the dependence of power companies on thermal power, the greater the pressure on electricity prices.
Tokyo Electric Power Company has the greatest pressure to increase prices. After the Fukushima nuclear power plant accident, the company has shut down nuclear power and relies heavily on thermal power.
Compared with January this year, TEPCO’s fuel cost for power generation in November has increased by more than 70%.
Japanese scientific critic Kaoru Takeuchi said that the current dependence of Japan's electric energy on fossil fuels is about 80%, and the price increase of fossil fuels naturally drives the increase of electricity prices.
Koyama Ken said that the natural gas market is facing an abnormal situation of high spot prices, and the supply and demand situation this winter is worrying.
Naohiro Nimura, an analyst at a Japanese market risk consulting firm, said that if there is a severe cold this winter, the supply and demand of natural gas in the international market will become tighter, and prices will rise accordingly.
Power companies will have to increase their purchases of spot market natural gas, and the trend of rising electricity prices may continue until next summer.
In order to minimize the pressure of rising electricity prices, the Ministry of Economy, Trade and Industry of Japan has called on power companies to increase LNG inventories.
Since the Fukushima nuclear accident in 2011, nuclear power has been opposed by all parties in Japan, and the restart progress has been slow.
In fiscal 2019, the share of nuclear power in electric energy dropped to 6%.
The Japanese government proposes to reduce the dependence on thermal power to 41% in the 2030 fiscal year and restore the proportion of nuclear power to 20% to 22%.
Some experts analyzed that considering the fuel price hikes caused pressure on thermal power and rising electricity prices, it is expected that the Japanese government will intensify efforts to promote the restart of nuclear power in the future.