UPDATE 3-Japanese utilities post losses, seek state support

Wed Apr 30, 2014 10:17pm EDT

Related Topics

* Six out of nine Japan utilities report losses

* Utilities warn of rate hikes as reactors remain idle

* Kyushu, Hokkaido Elec seek support from state-run bank (Adds decommissioning plans)

By Mari Saito

TOKYO, April 30 (Reuters) - Japan's nuclear-reliant utilities reported losses for the third straight year and warned of further electricity rate hikes to pay for surging fuel imports as they face an uncertain outlook for restarting idled reactors.

Six of Japan's nine big regional power companies, all of which own reactors, reported a combined net loss of $3.3 billion as they face the rising fuel costs and also spend billions of dollars to upgrade nuclear facilities to meet new regulatory standards.

All 48 of the nation's reactors were steadily brought offline after the March 2011 earthquake and tsunami, which triggered three reactor meltdowns at the Fukushima Daiichi plant, the worst nuclear disaster since Chernobyl in 1986.

Utilities are required to take reactors down about once every 13 months for maintenance, and in the wake of the Fukushima crisis a number of factors, including local communities' opposition, have prevented them from coming back online.

"We can no longer deny the possibility that we will not be able to restart a nuclear plant for some time," Kansai Electric Power President Makoto Yagi told an earnings briefing on Wednesday, adding that another electricity rate hike may become inevitable. It raised rates by 9.75 percent last May.

Kansai Electric, Japan's second-largest utility by revenue which supplies nearly one-fifth of the nation's electricity, reported a 97.4 billion yen ($950 million) net loss for the fiscal year that ended on March 31, its third consecutive year of losses.

PROLONGED SHUTDOWN

Kyushu Electric Power and Hokkaido Electric Power said on Wednesday they would request financial support from the government-affiliated Development Bank of Japan, asking it to buy 150 billion yen in preferred shares in the two utilities.

Kyushu Electric serves Japan's southern main island which is home to several auto and chip plants, while Hokkaido Electric serves the northernmost island.

The three consecutive years of net losses for utilities will make it difficult for them to secure further private-sector loans under standard Japanese banking practices, pushing firms like Kyushu and Hokkaido to seek public support.

Kansai Electric, whose annual revenue exceeds its Kyushu and Hokkaido peers combined, repeated on Wednesday that it is not currently considering seeking financial support.

Japan's utilities relied on nuclear plants to provide around 30 percent of their electricity output before the Fukushima disaster. Out of the nine regional monopolies with nuclear reactors, Kansai had the greatest dependency - at nearly half.

Tokyo Electric Power, Japan's biggest utility and operator of the destroyed Fukushima plant, returned to profit for the first time since 2009/10 with a 438.6 billion yen net profit, reflecting rate hikes and aggressive cost cutting.

An independent regulator set up after the Fukushima disaster has been vetting restart applications for 10 plants but has so far only fast-tracked Kyushu Electric's Sendai nuclear station in southwestern Japan.

Even in the most optimistic scenario, analysts and industry watchers say Japan may only be able to restart one-third of its reactors, while 17 are unlikely ever to come back online due to their age, location or proximity to suspected active fault lines.

Utilities are starting to face the prospect of permanent shutdowns, according to the Asahi newspaper. Chubu Electric Power Co, Shikoku Electric Power Co and Kyushu said on Wednesday they are considering decommissioning old reactors, the Asahi reported.

Kansai President Yagi also said the company is considering scrapping old units.

Kansai has already spent a little more than $1 billion to equip its three nuclear plants with emergency water pumps, vents and anti-earthquake features to meet the regulatory standards. Kyushu expects to spend more than $3 billion on upgrading its nuclear plants.

On Wednesday, Kyushu submitted a 7,200 page revised application to the regulator that outlines its planned upgrades and safety improvements to its Sendai plant as it attempts to receive clearance to reopen the facility. But the process remains uncertain.

"We still do not know the final schedule for any restart," the company's spokesman told reporters.

(Additional reporting by Kentaro Hamada in TOKYO, Yoshiyuki Osada in OSAKA; Editing by Edmund Klamann, Pravin Char and Joseph Radford)

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