METI commission to question power utilities on Japan's winter shortages

Tokyo — Japan's Electricity and Gas Market Surveillance Commission plans to hold a public hearing with major power utilities on Feb. 25 on their rationale with regard to electricity tenders and LNG fuel restrictions during the country's recent power supply concerns.

The idea was presented Feb. 17 during a power and gas policy subcommittee at the Ministry of Economy, Trade and Industry's electricity and gas industry committee.

The public hearing will take place as part of the Electricity and Gas Market Surveillance Commission's ongoing probe into nine major power utilities.

At the Feb. 25 expert meeting, the Electricity and Gas Market Surveillance Commission plans to ask the major power utilities about their decreased sell tenders and increased purchases of electricity during the recently tightened power supply and demand balance.

During the public hearing, the surveillance commission plans to ask the utilities to lay out their reasoning for whenever there are large deviations between their estimated and actual demand at the time of their spot electricity tenders.

It will also ask for the utilities' calculation methods for their LNG fuel restrictions, including on how they set the lowest limit in tank operations as well as details on their operations during the fuel restrictions.

The commission will also ask the utilities how they considered the market impact when setting fuel restriction volumes.

Enhanced surveillance

METI is undertaking a probe into major power utilities to scrutinize their response to the recent upsurge in power demand, with a focus on their restrictions on fuel use amid low LNG inventories.

METI has said the recent spike in spot electricity prices was due to a combination of increased power demand from cold spells, decreased gas-fired power output from reduced LNG inventories and electricity being sold out on the wholesale market.

The Electricity and Gas Market Surveillance Commission has already enhanced its surveillance of sell tenders from nine power utilities. The commission's enhanced surveillance is to look at whether the utilities could be overestimating their tender restrictions, especially in terms of fuel, as well as scrutinizing the conditions of the tenders. It will also look at utilities' reserve capacity and demand.

In order to verify and analyze the utilities' sell tenders, the commission is also conducting a survey of the utilities' fuel restrictions, requesting that the companies report their rationale for sell tenders on a daily basis, as well as requesting detailed data from electricity sources as samples.

Peak demand

Japan's power demand rose 7.6% year on year to 86,427 GWh in January, after having risen 8% year on year in the second half of December to 43,189 GWh amid cold spells in the country, according to the METI documents released Feb. 5.

In line with increased power demand, Japan's spot electricity prices on the wholesale market rose to an all-time high of Yen 251/kWh on Jan. 15, although it then fell back significantly after METI approved a special action to cap the imbalance tariff at Yen 200/kWh from Jan. 17 onwards.

Japan's LNG stocks held by power utilities rose to 1.43 million mt on Jan. 17 after dropping to a multi-month low of 1.16 million mt on Jan. 11, as the country is now past its peak winter power demand period, according to a survey released by METI Jan. 19.

In the wake of the magnitude 7.3 earthquake offshore Fukushima late Feb. 13, which shut a dozen coal and gas-fired plants, Japan's day-ahead 24-hour spot electricity price on the Japan Electric Power Exchange rose from Yen 5.14/kWh on Feb. 14, although several plants are being restarted.

Japan's day-ahead 24-hour spot electricity price stands at Yen 12.40/kWh for Feb. 18, up 16% from Yen 10.69/kWh for Feb. 17, according to JEPX.