Tuesday, June 10, 2014

How Expensive IS Electricity in Japan?

As a TEPCO consumer, I get a large bill each month.  It seems very large compared with what I was charged for a larger house in the Washington DC suburbs before I moved here in 2004.  But the fee includes various charges, base connection costs, fuel costs, etc., so it is difficult to discern a straight cost per kWh.

A few weeks back Nikkei reported an IEA study comparing international rates.  This shows that for commercial/industrial customers the average rate in Japan is now 250% that in the U.S., and has increased 25% since the March 2011 disasters.

Nikkei indicates that the electricity cost for industrial/commercial customers in 2013 in Japan was 17 yen per kWh, while that for residential customers was 23.63 yen per kWh.  These are 25% and 16% increases over 2010.  The same article indicates the 2013 U.S. "corporate" (i.e. industrial and commercial) rate was 6.64 yen per kWh.

IEA notes that the U.S. benefits from cheap shale gas, while Japan suffers from long-term high cost contracts for imported LNG (priced off of Middle Eastern crude oil benchmarks).

Also, transmission/distribution fees are extremely high in Japan.  METI indicates (according to Nikkei) that grid repair/maintenance costs in Japan are more than 7 times those in California (and 3 times those in Korea) ... perhaps as a result of the regional utility monopolies?

Interestingly, the article includes a chart showing that during the same period France -- which relies more than any other country on nuclear power -- has also suffered a big pricing increase.  In fact, from 2007 to 2013 French "corporate" electricity prices have increased more than Japan on a percentage basis, though remaining far lower in absolute terms (around 12 yen per kWh).

Of course, if calculated in Japanese yen, another reason Japanese electricity costs are higher now than in 2010 is exchange rates.  All of Japan's oil, coal and gas are imported.  The yen-dollar rate the last weeks of CY 2010 and 2011, respectively, were 81.48 and 77.66.  The last week of 2013 the yen-dollar rate was 104.83.  So even if fuel costs had remained constant in dollar terms, they would be up over 30% in yen terms.  Ouch.

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