Make Every Possible Effort to Gain Understanding of Users

Editorial

12:12 JST, May 24, 2023

Raising electricity rates as prices continue to soar will place an even greater burden on the public. Each major electric power company that plans to raise its electricity rates must make every possible effort to gain the understanding of users.

The Economy, Trade and Industry Ministry has approved electricity rate hikes for households that seven of the 10 major power utilities, including Tokyo Electric Power Company Holdings Inc., Tohoku Electric Power Co. and Hokkaido Electric Power Co., had applied for. Starting in June, the planned hikes for average households range from 14% to 42%.

The seven companies had initially requested a 28%-48% increase, but Prime Minister Fumio Kishida ordered a strict review of the applications before the unified local elections, and the increases were reduced. The timing of the rate hikes, which were expected this spring, has also been delayed to June.

Electricity rates are being held down by government subsidies, but this is a time-limited measure that will last until September. Since electricity is indispensable for people’s daily lives, it is quite natural that the rate increases should be strictly scrutinized and the amounts by which they increase should be controlled.

The prices of fuel for thermal power generation have been falling since the application for electricity rate hikes was submitted, and the excessive depreciation of the yen that drove up import prices has subsided. These factors were also reflected in the rate increases.

The seven companies intend to work to curb fuel costs and reduce personnel expenses, including compensation for executives, among other efforts. It is hoped that they will ensure the implementation of efficient management.

There are two types of electricity rates: free rates, which each company can set on its own following the liberalization of the electricity retail market, and regulated rates, which require government approval. This time, the seven firms applied to raise their regulated electricity rates. People who have not changed their electricity plans since the market liberalization are charged regulated rates, and they make up the majority of households.

Fundamentally, there is a fuel cost adjustment system that has allowed power utilities to reflect fuel price fluctuations in their electricity rates without receiving government approval. However, maximum prices have been set and the companies have already reached this ceiling. Each company has to cover the excess on its own, resulting in a ballooning deficit.

Even though rate hikes are inevitable to ensure a stable supply of electricity, many people might not be entirely convinced in the midst of a series of scandals at electric power firms.

In December last year, it was discovered that major electric power companies improperly accessed information about customers of new entrants to the electricity market. In March this year, it was acknowledged that four companies, including Kansai Electric Power Co., had violated the Antimonopoly Law in a cartel over the sale of electricity to businesses.

All of this wrongdoing undermines the purpose of market liberalization, which is to promote fair competition and realize electricity rate reductions. Unless each company takes thorough measures to prevent a recurrence and changes its corporate culture of disregard for laws and regulations, it will not be able to gain the understanding of users.

On the other hand, Kansai Electric and Kyushu Electric Power Co., which are promoting the restart of their nuclear reactors, did not apply for rate hikes this time. In order to halt the rise in electricity rates due to soaring imported fuel prices, it is also important for other major power utilities to restart their nuclear reactors after thoroughly implementing safety measures.

(From The Yomiuri Shimbun, May 24, 2023)