AMPONTAN

Japan from the inside out

Paying through the nose

Posted by ampontan on Monday, May 9, 2011

LAST WEEK, we had a post about the government’s plan to raise electricity rates nationwide to offset the compensation Tokyo Electric Power will have to pay as a result of the problems at the Fukushima nuclear plant after the earthquake/tsunami.

The post included the objections of several people that the public should not be forced to assume a liability that should properly be borne by the company’s owners, i.e., its stockholders. (Japanese law also requires the government to assume the liability if the total exceeds a certain amount.) Why, those people asked, should consumers make sacrifices to protect the investments of the utility’s stock and bond holders.

One of those cited in the post was former Ministry of Finance official Takahashi Yoichi, who is now a university professor. He also worked with Takenaka Heizo on the privatization of Japan Post in the Koizumi administration.

Not only does Mr. Takahashi object to the plan to raise rates, he calls for rates to be reduced through the adoption of smart grids and deregulation that would allow for the entry of other power producers in the industry. One of his arguments is that Japanese electricity rates are too high to begin with. To buttress that argument, he offered the following chart in an article on the Gendai Business website (in Japanese), which I swiped to use here.

The headline says that the chart is an international comparison of electric power rates for 2010, with Japanese rates as a baseline of 100. The blue bars are the rates for household use, and the red bars are the rates for commercial use. From left to right, the six countries are Japan, the United States, Great Britain, Germany, France, and South Korea. One caveat: He does not cite the source for his statistics, but let’s give him the benefit of the doubt.

In short, Japanese rates are already twice those of all rates in the United States and South Korea, and commercial rates in France. Only Germany’s household rates even approach Japanese levels. Mr. Takahashi says the scheme now under discussion in the Kantei could further boost rates as much as 20%.

The justification for the high rates in the past, according to Mr. Takahashi, was that that there are no blackouts in Japan. That justification is no longer valid after the rolling blackouts in Tokyo earlier this year.

A final note: One difficulty in keeping up with the debate on public issues in Japan is that important information tends to dribble out over a long period of time — often years — from a wide range of sources. Sometimes that information is provided deep in an article in a specialty publication, almost parenthetically.

That’s happening again. It turns out that foisting the costs of the compensation on the consumers would protect more than the big banks and other large institutional investors. Tokyo Electric Power has a relatively high number of individual investors. Mr. Takahashi passes along the rumor that among them are members of the Japanese Imperial family.

That would be most curious if it were true. Though they would never admit it in public, Kan Naoto and many others in the DPJ’s left wing are probably republicans in the British sense of the term.

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3 Responses to “Paying through the nose”

  1. Ken Y-N said

    Isn’t Japan temporarily relatively cheaper due to the strong yen? It would be nice to know the exchange rate used, and of course are they talking about per-unit or including standing charge, etc. I know when I first came to Japan 12 years ago electricity per unit was then four times the UK, but that was at 250 yen to the pound. Mind you, we also have to allow for inflation, and for European countries there is less need for air conditioning and probably better insulation.
    ———
    KYN: Thanks for the note. Excellent points all.

    The more you think about it, all sorts of complicating factors arise. One would be the price of oil and a country’s relative reliance on oil for power generation. Also, I think I read that half of all power in the US is generated using coal, most of which is domestically mined.

    – A.

  2. TonyGoalder said

    It’s difficult to calculate objectively. While the exchange rates may affect comparisons among countries, for Japanese people themselves the rates are largely unchanged. In fact, over the past 5 – 10 years salaries have declined and I believe electricity rates have stayed the same. In terms of disposable income, electricity costs are probably more now than they were 5 years ago.
    ————
    TG: There’s a rate adjustment scheme in place that allows rates to be periodically adjusted depending on such factors as the price of oil. The rates are adjusted, if not often, then at least every once in a while.

    – BS

  3. toadold said

    The nuclear power industry for the most part has been ossified when it comes to introducing new and improved power plants. Due in part to being heavily under the bureaucratic thumbs of governments. In Japan and the US they’ve stuck to the obsolescent pressurized water uranium fueled reactors. There is little to no competition in these countries nuclear energy fields. Nobody can get the capitol and clout to get over insane regulatory hurdles to build safer reactors. In the US,as stated, their are the fall back energy sources of coal and the potential of huge reserves of natural gas. I’m hoping that with a regime change the US could get started on the molten salt, thorium reactors. I wonder what would happen if Oil and Natural gas deposits were discovered off the Eastern shores of Japan. Would the greenies succeed in blocking development or not?

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