| Japan's largest power utility Tokyo Electric Power Company, or Tepco, has fallen into sharp deficit for two consecutive years after suffering from nuclear accidents caused by the earthquake and tsunami on March 11, 2011. Not only does Tepco have to pay a huge amount of compensation for damages caused by the accidents, but rising fuel costs have also harmed the company. The company, which sells about one third of the electricity generated in the 120m population country, carries out a vital role in supplying power to people. But to ensure its survival ~ and eventual return to profitability ~ requires a huge injection of government funds and a drastic change in its structure of ownership. And in addition, in a move that is already meeting resistance, a significant increase in its electricity prices. On May 14 this year, Tepco reported a net loss of ¥781.6bln ($9.8bln) for fiscal 2011-12 (April-March), its second net loss in a row, though narrowing from the record ¥1.247 trillion loss recorded the previous year. Revenues declined 0.4% year on year to ¥5.349 trillion because of lower electricity sales. The company sold 268,230GWh of electricity, down 8.6% from a year earlier, as people tried to save power given limited supplies, coupled with lower production activities in industry, the utility saidAt the same time, its fuel costs surged. Expenses for fuel were ¥2.287 trillion, up 54.3% on 2010-11. Fuel costs accounted for 40.9% of total ordinary expenses in the fiscal year, up from 30.0% in the previous year. They also amounted to as much as 42.8% of its revenues. The high fuel costs arose on greatly reduced electricity output from its nuclear power plants. On March 11, 2011, a massive earthquake hit the eastern part of Japan. The magnitude-9 quake shut all of the nuclear reactors in Fukushima Prefecture, about 220 km northeast of Tokyo. At that time, Tepco owned 17 nuclear power reactors ~ six in Fukushima Daiichi, four in Fukushima Daini and seven in Kashiwazaki Kariwa. At the time of the earthquake, three units were operating in Fukushima Daiichi, and all four units were operating in Fukushima Daini. All of those units were automatically shut by the earthquake. Operations at Kashiwazaki Kariwa nuclear power plant in Niigata Prefecture, west of Fukushima, were not immediately affected and the plant continued to operate. However, the reactors were shut one by one for turnaround for maintenance. And Tepco was not able to restart those reactors because of prolonged checkups and lack of approval from local and central government authorities. All of Tepco's nuclear power units stopped operations by March 26 this year. As a result, Tepco's nuclear utilisation rates dropped to 18.5% in 2011-12 from 55.3% in the previous fiscal year. To make up for the power source shortfall caused by the lack of nuclear output, Tepco used thermal power plants, which generated 210,300GWh of electricity out in 2011-12, up 24.5% on the year. Fuel consumption soared in line with that. Tepco's coal consumption in the fiscal year rose to 3.22m mt, up 6.8% year on year. Fuel and crude oil consumption jumped 69.9% to 8.076m kl (50.8m barrels) and LNG consumption came in at 22.884m mt, a 17.6% increase. Tepco received about ¥2 trillion funding from financial institutions in March 2011, but the amount of working cash or cash equivalent it had on hand had fallen to around ¥985bln as of March 31, 2012, due to rising fuel costs and the maintenance expense of keeping other power plants functioning, the company said. |
