Sales slump for Japan's top utilities after retail power market shakeup

Okinawa Electric Power

31/10/2016 11:09

* Tepco H1 profit slumps 66 pct from year ago, sales down 16 
pct 
    * Tepco loses about 5 pct of retail power customers over H1 
    * Chubu, Kansai also see exodus of customers, lower sales 
 
    By Osamu Tsukimori and Yuka Obayashi 
    TOKYO, Oct 31 (Reuters) - Japan's biggest power utilities 
reported a slump in sales for the first half of the year, after 
an unprecedented shakeup of the sector stripped these firms of 
their monopoly to supply to more than 62 million retail power 
customers. 
    Japan's top 10 utilities - having barely recovered from the 
Fukushima nuclear disaster of 2011, the resultant high fuel 
costs after most reactors were shut and costly safety upgrades - 
are now facing an exodus of their customers with Japan's $70 
billion retail market thrown open to more than 350 firms. 
 urn:newsml:reuters.com:*:nL3N16V2T4 
    Tokyo Electric Power Co  9501.T  (Tepco) typically supplies 
more than 22 million retail power users, but lost 1.08 million 
of them to new entrants in the six months ended Sept. 30, 
official data shows. As a result, Tepco's sales for the period 
sank nearly 16 percent and profit plunged 66 percent. 
    "The number (of customers leaving Tepco) is changing every 
day as the liberalization continues ... We will of course need 
to think of ways to counter that competition," TEPCO President 
Naomi Hirose said at an earnings press conference on Monday. 
    While other utilities - such as Chubu Electric Power 
 9504.T  and Kansai Electric  9503.T  - also lost customers due 
to the reforms, Tepco was hit the hardest given its reputation 
has been tarnished by the bungled response to the earthquake and 
tsunami five years ago that led to three reactor meltdowns at 
its Fukushima Daiichi plant. 
             
    CUSTOMERS LEAVE      
    Chubu Electric, Japan's No.3 utility, lost nearly 150,000 
customers in the first half and expects things to get worse. 
    "We think there are customers taking a wait-and-see stance 
and we expect the competition in the Chubu area will become more 
severe from now on," Chubu Electric President Satoru Katsuno 
said on Friday, when the utility announced a nearly 12 percent 
drop in sales for the first half. 
    Kansai Electric  9503.T , the second-biggest of the regional 
utilities, has lost 381,000 customers and posted a nearly 8 
percent drop in sales. Its president, Shigeki Iwane, said this 
was a "serious problem", the Kyodo news agency reported. 
    The big utilities have been trying to minimise the pain by 
introducing power fee schemes, such as discounts for late night 
hours, to help attract customers. They also are looking to enter 
the retail city gas markets that will be opened up next April. 
    What has been a big jolt for the former monopolies has, 
however, proven to be a gain for some others such as Japan's top 
gas supplier, Tokyo Gas Co  9531.T , which has won more than 
half a million retail power customers and aims to reach the 1 
million mark by the end of March 2018. 
    A government Internet survey carried out last month showed 
that 7 percent of Japanese retail electricity customers would 
like to switch suppliers by the end of March next year. 
    Japan's power sector overhaul is off to an excellent start, 
with customers switching suppliers at a "good pace" versus other 
markets that have liberalized, Daiwa Institute of Research's 
senior economist Shuichi Osawa said in a note. 
    In Italy, 8.1 percent of customers changed suppliers over 
nine years since the market was opened up, while in Germany a 
similar rate of change took 16 years, Osawa said.  
    
    For tables outlining the latest results for each utility, 
click on the following links: 
     
 Hokkaido Electric   urn:newsml:reuters.com:*:nXB1TRWFNZ 
 Tohoku Electric     urn:newsml:reuters.com:*:nXB1JDTGIF 
 Tokyo Electric     urn:newsml:reuters.com:*:nXB147YTAB 
 Chubu Electric        urn:newsml:reuters.com:*:nXB0MLLQQ8 
 Hokuriku Electric      urn:newsml:reuters.com:*:nXB1DN251T 
 Kansai Electric        urn:newsml:reuters.com:*:nXB16D4GPJ 
 Chugoku Electric      urn:newsml:reuters.com:*:nXB0GHU02E 
 Shikoku Electric      urn:newsml:reuters.com:*:nXB1OP9HIB 
 Kyushu Electric       urn:newsml:reuters.com:*:nXB0QV51BV 
 Okinawa Electric      urn:newsml:reuters.com:*:nXB0VFPXB4 
 
 (Reporting by Osamu Tsukimori and Yuka Obayashi, Writing by 
Aaron Sheldrick; Editing by Himani Sarkar) 
 ((osamu.tsukimori@thomsonreuters.com, +813 6441 1857, Reuters 
Messaging: osamu.tsukimori.thomsonreuters.com@reuters.net;)) 
 
Keywords: JAPAN UTILITIES/RESULTS