Tokyo Electric Boosts Coal Capacity to Cut Need for Costly Oil [View all]

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Tokyo Electric Power Co. (9501), Japan’s biggest utility, may cut its oil purchases by more than one- third as it boosts its reliance on coal plants to reduce an energy bill that’s ballooned since the Fukushima nuclear crisis.

Tepco, as the utility is known, will generate or buy as much as 54 percent more electricity from coal-fired plants starting this month compared with last year, according to calculations based on company statements. That may enable it to reduce its purchases of crude and fuel oil by as much as 3.95 million kiloliters, or 68,000 barrels a day, according to Osamu Fujisawa, an independent energy economist in Tokyo. Tepco bought 10.8 million kiloliters in the year ended March, the company said today in a report on its website.

Tepco’s fuel costs surged after the March 11, 2011, earthquake and nuclear disaster, since it’s had to rely on oil, gas and coal to replace idled nuclear capacity. The company will do “whatever it takes” to return to profitability and hopes to do so without raising rates for customers, Naomi Hirose, Tepco’s president, said this month.

“By establishing new coal-powered plants, thermal power generation costs can be reduced, first by cutting the use of oil-burning units,” said Reiji Ogino, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co. “Japanese government requests to power companies that they lower the rates they charge will encourage movement to coal-fired plants, since coal is a relatively cheap energy source.”

Tepco will add 2.6 gigawatts a year of coal-fired power from two new plants and electricity bought from two units owned by Tohoku Electric Power Co. (9506) that restarted after being damaged in the earthquake.

http://www.bloomberg.com/news/2013-04-10/tokyo-electric-boosts-coal-capacity-to-cut-need-for-costly-oil.html