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Biggest Japan utilities see sales fall as competition rises

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Japan's biggest utilities, including Tokyo Electric Power Co Holdings Inc, saw revenue slide amid faltering demand and rising competition from new market entrants.

[TOKYO] Japan's biggest utilities, including Tokyo Electric Power Co Holdings Inc, saw revenue slide amid faltering demand and rising competition from new market entrants.

Tepco, as Japan's biggest utility is known, posted operating profit of 149.2 billion yen (S$1.97 billion) for the three months ended Sept 30, down 4.8 per cent from a year ago, according to Bloomberg calculations based on a statement released Monday.

Revenue fell about 13 per cent to 1.38 trillion yen as the company's electricity sales volume dropped and rates were automatically lowered by the nation's price adjustment system. The system adjusts monthly electricity prices for each utility based on a three-month average of import prices for LNG, crude oil and coal.

Japan's regional utilities are getting squeezed by new entrants after the government of Prime Minister Shinzo Abe liberalized its retail power market in April, allowing consumers to choose their electricity providers for the first time. Over 350 companies have registered to sell power in Japan as of October 24, according to the Ministry of Economy, Trade and Industry.

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Almost 1.9 million consumers have switched from the incumbent power companies to new suppliers as of Sept 30, according to data from the Organization for Cross-Regional Coordination of Transmission Operators. The nearly 1.1 million who have switched from Tepco is small proportion of the company's customer base of more than 29 million.

The company's quarterly net income, which includes extraordinary items, rose 22 percent from the same period last year to 93 billion yen. One-off losses during the quarter related to the Fukushima nuclear accident shrunk by 18 percent from last year, while the company saw a gain of 36.4 billion yen due to the transfer of thermal power operations to its joint-venture with Chubu Electric Power Co. Tepco didn't post one-time gains in the same quarter last year.

Rival utilities also saw a decline in revenue on a drop in power sales. Kansai Electric Power Co's revenue fell 4.6 per cent to 802.7 billion yen for the three-month period ended Sept 30, as electricity sales declined 3.2 per cent to 32.9 terawatt hours. The company's net income increased by 32 per cent to 78.5 billion yen, primarily due to to lower fuel costs.

Chubu Electric's revenue dropped 8.4 percent to 675.7 billion yen for the period, while the company cut its sales forecast for the current fiscal year to 2.59 trillion yen from 2.61 trillion. Net income increased by 50 percent to 81.4 billion yen.

Kyushu Electric Power Co and Shikoku Electric Power Co were the only two of Japan's 10 regional utilities to report increased revenue. Kyushu said sales rose 4.3 per cent to 498.4 billion yen, and the company gained much 7.6 percent to 1,025 yen in Tokyo trading on Tuesday.

Shikoku Electric said sales climbed by 5.6 per cent to 179.1 billion yen.

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