Japanese utilities are collapsing, some more than others, as sky-high fuel prices hit profits

TOKYO, Feb 1 (Reuters) – Japan’s 10 regional utilities have all cut their profit estimates for this business year due to soaring fossil fuel prices, but Kyushu Electric (9508.T) and Kansai Electric (9503 .T) are more resistant to pain, having successfully restarted nuclear power plants.

Heavily dependent on fossil fuels since the Fukushima disaster in 2011, four utilities reported losses for the nine months to the end of December, while six are now forecasting full-year losses.

Chubu Electric (9502.T) is the hardest hit, forecasting an annual net loss of 45 billion yen ($391 million) compared to its earlier expectation of a profit of 25 billion yen.

“High prices for fuels such as LNG have eroded our profits,” Masakazu Tsubouchi, accountant group manager at Chubu, said in a briefing, adding that rising wholesale power prices were also hurting his business. retail unit.

Tohoku Electric (9506.T) also lowered its full-year outlook, forecasting a loss of 45 billion yen from its earlier hopes for a profit of 23 billion yen, while Tokyo Electric (9501.T) widened its loss estimate at 41 billion yen from 16 billion yen.

Reflecting the tight global supply, thermal coal prices jumped 81% during the review period, LNG spot prices in Asia rose almost fivefold and Brent crude oil rose 21%. Read more

Only three of nine utilities with nuclear power plants have successfully restarted plants, as many reactors are still undergoing license renewals due to stricter safety standards imposed after 2011. Kyushu and Kansai have also restarted reactors additional this year.

Kyushu’s nuclear power utilization rate hit a record 98% in April-December, keeping the company firmly in the black, although it cut its profit estimate for the year full 44% to 25 billion yen.

Kansai’s nuclear utilization rate doubled from the previous year to 63%. The utility expects its annual rate to reach its highest level since 2010 and the contribution of nuclear power to its profits is estimated at 60-70 billion yen for the year, a spokesman said. of the society.

It cut its annual profit outlook by 7% to 65 billion yen.

Under Japan’s Fuel Cost Adjustment Program, utilities can pass on most higher fuel costs to consumers within 3-6 months, meaning the impact on profits at medium term will be mitigated.

“In the short term, Kyushu and Kansai will outperform their rivals as they have a relatively high share of nuclear power in their power generation mix,” said Toshinori Ito, president of Ito Research & Advisory, which specializes in energy markets. energy.

“But these earnings cannot cover all the heavy expenses they faced in the aftermath of the disaster, including fuel supply costs and construction costs to meet stricter nuclear standards,” he said. -he declares.

($1 = 115.0000 yen)

Reporting by Yuka Obayashi; Editing by Edwina Gibbs

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