Hokuriku Electric Power Co published they will partly increase electricity rates on Apr1.
Hokuriku, along with Chugoku Electric Power Co, is one of Electric Utilities which have not increased electricity rates after the Great East Japan Earthquake, eventually judged they cannot afford the cost heavily caused by shutdown of Shika nuclear power.
This judgement exposes some structural problem Electric Utilities have in their bill. First, rate increase is limited upon large and all-electric customers.
Electric Utilities, for a long time, have challenged to make nighttime-demand to increase the availability of their own power plants.Cheap nighttime electricity rate for large manufactures and all-electric customers has contributed to high availability. It is lower than daytime because Utilities collect only fuel cost at night, or they haven’t collect other fixed cost, for example, Grid cost at night.
It has been rational under old circumstance especially vertically unified structure of Electric Utilities.
In the near future, this way of thought will be irrational. As is generally known, Electric Utilities are forced to separate their Grid in 2020 by revised Electricity Business Act. Therefore, both separated Sales Utilities (derived from present Electric Utilities) and New powers will have to pay for wheeling service whether daytime or nighttime it will be. Whether the customer is large manufacture or all-electric or else, Sales Utilities have to pay for Grid. After the division of Electric Utilities, manager of all separated companies (or Power, Grid and Sales) must prioritize profits of their own.
Whether wheeling service cost has been included in electricity bill in the past or not doesn’t matter at all, on the contrary, they have to get profit from each contract. Hokuriku’s decision this time suggests one of the ways to go through this difficulty.
Second, the fact that rate increase is limited upon electricity charge, and demand charge doesn’t change is extraordinarily important. Needless to say, Electric Utilities are heavy-equipment industry, therefore, fixed cost are relatively high. So their demand charge should be high, but due to long age of increasing demand, demand charge has been relatively low irrespective of their cost structure.
This present rate structure will soon be unaffordable. In the long run, electricity demand will not increase as much as in the past.
Under such circumstances, they have to struggle to collect fixed cost caused by equipment which doesn’t decrease in a short time. It will soon be inevitable to increase demand charge rather than electricity charge that will be shrinking.
Electric Utilities, not only Hokuriku, seem to put off that difficult task with various reasons. Cheap nighttime rate, ratio of demand and electricity charge were both rational decision of Electric Utilities under the past business circumstances. But now, under such environment as division of Grid, sluggish electricity demand, rationality of rate now being lost, they are forced to allocate their real cost and revise rate structure.
Electric Utilities will go through the hard way to overcome the vested right of light users, and restriction of METI, which is deeply concerned with public opinion, and will have no way alternative to gradually flatten the rate daytime and nighttime and improve the ratio of demand and electricity charge. We users, should prepare for this rate change inevitable in the near future.