16 April 1999
As the first topic on today's agenda, I would like to announce my
retirement as president of Tokyo Electric Power Company. My
resignation will take effect after the TEPCO shareholders' meeting at
the end of June. As of that date, I will also resign the post of FEPC
chairman. I have asked the president of Chubu Electric Power Company
to take over as FEPC chairman, and this was unanimously approved at
the FEPC presidential meeting held today. I believe the new chairman
will formally greet you at a press conference in June.
Next, I would like to comment on two topics: The Fifth EEI-FEPC-UNIPEDE International Electricity Chief Executives Summit Meeting, and electric power demand in fiscal 1998.
The summit was held on 5 and 6 April in Hiroshima. 40 senior power industry executives from Japan, the U.S. and Europe took part in the meeting to discuss the current status of power operations in their respective countries, and exchange information and opinions.
There were two main discussion topics at the summit: market liberalization within the electric power industry, and measures taken to address the problem of global warming.
There were a number of interesting opinions expressed at the meeting with regard to market liberalization. It seems that in each country, liberalization is proceeding step-by-step as operators address issues that are specific to their situation.
Of the many issues that operators are faced with, the problem of unrecovered facilities investment costs appears to be a major concern in the U.S., and Europe. Although opinions on the matter are divided, operators will come under a great deal of pressure if their right to recover such costs is not recognized. With liberalization just around the corner, I feel strongly that this is an issue that needs to be discussed in our own country. I also think that such discussions should center on how facilities investment can be continued without putting public interests at risk.
I learned that U.S. operators have rapidly become more customer-oriented as competition has increased, and customers have begun to choose power suppliers on the basis of their responsiveness, quality of service and rates. Under such circumstances, it is essential that operators not only improve efficiency and offer lower rates, they must also offer value-added, unified management services that integrate electricity with communications, gas, water and other public utilities.
I was deeply impressed by the urgent need to address these issues by becoming more market- and customer-oriented.
I was also impressed by the attitude of operators in the U.S. and Europe in meeting the challenges they face. Rather than viewing deregulation as a test of their ability to change, they consider it to be an important business opportunity that will allow them to expand and participate in new ventures. There is much we can learn from this dynamic, pro-active way of thinking.
With regard to global warming, discussions focused on the efficiency of nuclear power, and its role in the future.
As many of you know, no new nuclear power plants have been constructed in the U.S. since the accident at the Three Mile Island Nuclear Power Station, and Sweden and Germany have begun to phase out nuclear power operations. In view of this, I had anticipated that summit participants from the U.S. and Europe might express rather strong anti-nuclear sentiments. However, there was not the case at all. Participants from the U.S. expressed the following views:
"Nuclear power is effective in limiting CO2 emissions, and its use is expected to play an important role in addressing this problem. It is therefore necessary to implement balanced energy policies." said Mr. E.Linn Draper, Jr. , chairman of American Electric Power Co., Ltd.
"Eliminating nuclear power generation is not the answer. Although our country has suspended new plant construction, we will continue to maintain existing facilities. Without nuclear power, it will be impossible to achieve CO2 emission reduction targets," said Mr. Thomas R. Kuhn, president of EEI.
Participants from Europe contributed the following comments:
"Although the situation in each country differs, discussions on nuclear power have been renewed since COP3. There are some who favor the construction of new plants, but I think it important that we use existing plants as long as possible," said Mr. Francois Ailleret, chairman of UNIPEDE.
"Due to a scarcity of energy resources, it is essential for Hungary to implement a balanced energy mix policy that includes nuclear power generation. Polls show that anti-nuclear sentiment is waning, and nuclear power generation can play an important role in reducing costs," said Mr. Istvan Bakacs, CEO of Magyar Villamos Muvek Rt. in Hungary.
In conclusion, although participants each had their own priorities, there was general agreement that nuclear power is an efficient and necessary energy resource that can play a major role in maintaining energy security and addressing the problem of global warming.
We were very encouraged by the positive attitude of U.S . and European participants toward nuclear power, and I was pleased to hear that Vice-President Gore of the U.S., has also spoken positively about nuclear power generation. Faced by the need to address the issue of global warming, it seems to me that the U.S. and European stance toward nuclear power is gradually changing.
The next electric power summit will be held in Paris in 2001.
I would now like to move on to the topic of electric power demand in fiscal 1998.
Please refer to Reference Document No. 2 for details of the 1998 electricity demand bulletin released today.
Demand for residential and commercial totaled 79.90 billion kWh across the ten companies, up 1.0% compared on the previous year.
Residential demand rose by 3.7% and commercial demand was up 4.9%.
On the other hand, large industrial demand, which is closely tied with economic activity, has recorded negative growth for 15 months in a row. This is the longest decline since the 18-month period from June 1969 to November 1970 when the first oil shock occurred. It is also equal in length to the March 1981 to May 1982 decline caused by the yen's high valuation, and to the December 1991 - February 1993 decline that followed the collapse of the bubble economy. The current 3.5% decline compares with the -4.8% in 1981, and -3.5% in 1969.
In March, large industrial demand at all FEPC member companies with the exception of Okinawa Electric Power Company dropped from the previous year. By sector, all raw material industries declined sharply, and manufacturing industries with the exception of transportation machinery (100%), declined in 1998 as well.
As stated, the decline in large industry demand is continues in virtually all regions and sectors. Based on electricity demand, it seems that the economy unfortunately suffers from the "lasting severe effects," described in the "Monthly Economic Report" released this week.
Finally, I would like to comment on some 1998 supply-side issues. Please refer to the material on capacity utilization rate trends at nuclear power plants shown in Appendix 1.
In 1998, the capacity utilization rate (incl. Japan Atomic Power Company) rose by about 3% to 84.2%, up from 81.3% from a year ago. This is the highest rate recorded to date, and if regular inspection downtime is excluded from the calculations, the rate would actually be 99%.
This represents the highest level of performance in the world. It was achieved through rigorous attention to safety on a daily basis, and a high degree of efficiency during regular inspections to ensure minimal downtime. The actual number of operating days lost to maintenance activities in 1998 was 55 days, 6 days less than in 1997, and the lowest figure in our history.
Efficient use of nuclear power leads to the conservation of fossil fuels. An improvement of just 1% in the capacity utilization rate saves about 860,000 kl of crude oil, with which a 1 million kW class thermal plant (utilization of 50%) can operate for about 10 months. This contributes to reduced CO2 emissions, and helps curb global warming. While giving safety top priority, I hope we can continue to fight global warming by boosting our capacity still further.