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Japan’s Power Gap


July 20 – Yokohama – Setsuden – or energy-saving – is again the buzz word of another scorching Tokyo summer, after last year’s Fukushima Daiichi nuclear plant meltdowns forced some 200,000 people to evacuate the region and sparked a debate over nuclear power generation in Japan.

In the wake of the disaster, plant shutdowns and national safety checks, power providers have been forced to look elsewhere for supply and to shore up capital.

The parent utility of Fukushima Daiichi – TEPCO – has given Tokyo-based industry and consumers another reason to wilt in the summer heat: electricity price hikes.

Rates for corporate customers have increased about 15%, and from Sept. 1st, households will see an 8.5% hike.

“The final price hike being 1.82% less than what we had proposed means 80 billion yen less revenue per year,” said TEPCO president Naomi Hirose.

At a recent press event, Hirose – now in his third week on the job – said increased revenues would fund further plant decommission and decontamination, as its 13 reactors are now off-line.

These hikes follow a 2.5 trillion yen (or $31.8 billion) government lifeline for Tepco in the wake of the disaster.

Japan has relied on nuclear power to generate 30% of electricity. With most of its 50 nuclear reactors offline and widespread concern over the safety of nuclear power, industry and the public alike need a solution to their energy needs that not only makes sense, but is one they can afford.

For companies in Japan like Nissan that struggled last summer with emergency measures to cut energy use, higher rates now will mean up to 3,500 yen in costs per car manufactured.

The implications for smaller firms, unable to weather additional energy costs, are serious, while TEPCO’s Hirose said the hikes and government funds may still not be enough.

Other utilities around Japan could follow suit by raising their rates, while the debate on how to generate affordable energy for households and companies, already facing headwinds such as the strong yen, could heat up even further as the summer cools off.

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