Japan utilities expect slow power demand recovery, cautious on outlook

Okinawa Electric Power

03/08/2020 08:51

By Yuka Obayashi
    TOKYO, Aug 3 (Reuters) - Japanese utilities expect a slow
recovery in electric power demand toward March after a 5% drop
in the April-June quarter though some are less confident that
the worst is over.
    Uncertainty over demand has deepened recently due to a
resurgence in coronavirus cases in Japan, forcing most utilities
to skip providing annual profit guidelines.  urn:newsml:reuters.com:*:nL3N2F22EM
    Slack power demand may cause a surplus of fuels such as
liquefied natural gas (LNG).
    That threatens losses for Japanese utilities committed to
large volumes of LNG under term contracts linked to oil prices
as they resell it at spot prices which are much lower.
    In the April-June quarter, May was the weakest month with
power demand falling 9%, according to the Organization for
Cross-regional Coordination of Transmission Operators, Japan
(OCCTO). 
    For industry leader Tokyo Electric Power Company  9501.T ,
household power demand in its region rose 5% thanks to lockdown
demand, but industrial and commercial demand have plunged, with
April-May figures plunging by 20%-50%, Managing Executive
Officer Rikuo Otsuki said.
    "Power demand will slowly pick up, but it won't return to
the levels before the pandemic during this financial year," he
told an earnings news conference last week.
    Chubu Electric Power  9502.T  also predicted a gradual
recovery later in the year, but annual demand in its region will
likely fall 6% year on year, said Yoshinobu Mishima, manager at
its Tokyo office.
    Others were even more cautious.
    "As the coronavirus cases are rising again, we can't say
demand has hit the bottom. ..it's difficult to make any
predictions now," said Yuji Sasaki, general manager at Tohoku
Electric Power's  9506.T  Tokyo office said.
    Nine of the top 10 regional utilities reported a drop in
their quarterly sales.
    Only Chubu and Chugoku Electric Power  9504.T  gave
full-year forecasts this time, both predicting falls in net
profit.
    Okinawa Electric Power  9511.T  forecast a gain in annual
profit in April, without factoring in the impact of the
pandemic.
    Chubu has warned its JERA fuel joint venture will book a
loss estimated at 50 billion yen ($471 million) on the resale of
LNG cargoes this year.  urn:newsml:reuters.com:*:nL3N2F23UQ
    ($1 = 105.9500 yen)

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 (Reporting by Yuka Obayashi; editing by Jason Neely)
 ((Yuka.Obayashi@thomsonreuters.com; +813-4563-2761;))