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RPT-More Japan firms willing to try new power suppliers-Reuters poll
December 10, 2013 / 4:35 AM / in 4 years

RPT-More Japan firms willing to try new power suppliers-Reuters poll

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* 22 pct of Japan firms in poll say they will look at using new power firm

* That is 17 pct points higher than response to similar question in Sept poll

* Firms explore options amid uncertainty on nuclear restarts, future reforms

By James Topham

TOKYO, Dec 10 (Reuters) - The number of Japanese companies willing to consider buying electricity from new providers has jumped from three months ago, a Reuters poll showed, amid uncertainty on the restarting of nuclear energy and after power-sector reforms were approved.

The rising corporate interest in non-traditional power sellers such as Toyota Motor Corp and Panasonic Corp could further hurt Japan’s regional power monopolies already reeling from increased thermal fuel costs and the costs of refitting or decommissioning nuclear power plants.

It comes after the government passed legislation last month that includes the creation of a national grid operator by 2015 and the liberalisation of the power market for homes soon after, moves that could lead to a break up of the regional power monopolies.

Twenty-two percent of 255 big Japanese companies said they would consider using a new power provider in a question asked during the monthly Reuters Corporate Survey taken by Nikkei Research between Nov 22 and Dec 4.

That is 17 percentage points higher than when a similar question was asked in the September poll of Japanese companies.

“Many Japanese citizens are strongly against the restart of nuclear power, and earlier there was some hope that it would change, but it hasn‘t, rather (anti-nuclear sentiment) might actually be getting stronger,” said Tetsuya Inoue, a senior researcher at Nomura Research Institute, who reviewed the survey results.

Japan is currently nuclear free for just the third time in more than four decades, following the massive March 2011 earthquake and tsunami that triggered reactor meltdowns and radiation leaks at the Fukushima Daiichi facility and caused the country to rethink its atomic energy use.

Japanese nuclear operators began applying in July to restart reactors under new rules drawn up after the Fukushima disaster, but an industry regulator driven to show a sceptical public it is serious about safety has made it hard to foresee when restart approvals will be granted.

“(Nuclear restarts) look to take a long time so companies are diligently studying other options (for electricity),” Inoue said.

Regional monopolies such as Tokyo Electric Power Co and Kansai Electric Power Co supply almost 98 percent of Japan’s electricity, and rules to access their transmission lines make it burdensome for new entrants.

But with Tokyo pushing to cut high electricity costs by opening up its market for competition and power companies’ public image battered in the wake of the Fukushima nuclear crisis, procurement methods for users look set to change.

Sensing an interest in alternative power providers, close to 120 companies have registered with the government to become licensed power producers and suppliers.

The independents can not only undercut the monopolies by accepting lower profit margins, but also provide power management systems and flexible buying plans to reduce prices and save energy.

Power costs for businesses have risen 30 percent since the Fukushima disaster, according to the Bank of Japan, and are likely to keep growing due to utilities’ dependence on costly thermal fuel, increased import costs from a weak yen and the future costs of nuclear plant decommissioning.

While electricity fees make up a only small portion of total costs for Japanese firms, any rise is a heavy burden due to the slim profit margins many face. (Editing by Muralikumar Anantharaman)

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