Japan and the Impact of No Nuclear Power

It’s not hard to understand the reason why:

Kansai Electric Power said it incurred a net loss of 242.26 billion yen ($3 billion) turning around from a year-before profit of 123.14 billion yen.

This is in Japan. I mentioned last week that a nuclear plant can be very expensive to build but very inexpensive to run – both in absolute terms and relative to other power plants. That can make them quite profitable over time. But if Kansai and other electricity providers in Japan – Tepco is the one that owns Fukushima Daiichi – switch off the plants and begin depending on electricity imports or coal imports to fire up older plants, this is the result.

“Operating costs surged from the year before with the lower utilization rate of nuclear power plants and higher fuel prices pushing up costs of thermal power generation and of electricity purchases from other companies," it [Kansai] said.

How are the other electric companies doing?

Hokkaido Electric Power, which until it flicks the switch on May 5 is the only company with a reactor still working, reported a net loss of 72.07 billion yen, reversing a profit of 11.98 billion yen in the previous year.

Tohoku Electric Power, based in the nation's northeast devastated in the March 2011 earthquake and tsunami, said its net loss grew to 231.91 billion yen in the year to March 2012 from 33.71 billion yen in the previous year.

I don’t know how electricity rates are set in Japan – and coming off a gigantic natural disaster – and the accident at Fukushima Daiichi – I can imagine no one wants to contemplate raising rates.

And yet - here comes Summer.

Let’s not be too doomy. The Wall Street Journal says that production capacity has returned almost to normal, though not without sacrifice:

Then, there's the question of whether Japan will have enough electricity to power all production in July and August when electricity demand is at its peak. While many companies are taking conservation measures or setting up on-site power generation, shortages could force rationing like last year or even rolling blackouts, crimping output. 

I could be wrong, but that “on-site power generation” is more likely to be gas-driven generators rather than windmills. The Journal isn’t focused here on the electricity providers – but it is the pressure on those companies that will determine what happens next.

Tokyo. In Godzilla movies, Tokyo always seemed eminently stompable by the giant lizard. Things do change.