Today' s press conference is the first for me as chairman of the FEPC
and president of Chubu Electric Power Co., Ltd. I thank you for
attending.
First of all, as chairman of FEPC, I would like to comment on recent electricity demand and this summer's demand forecast.
Please take a look at the table in the "Electricity Demand Bulletin," which was released today.
As you can see, total residential and commercial demand across the ten electric companies in June amounted to 62.3 billion kWh, up 1.2 % compared to the previous year.
By use, residential and commercial demand rose by 2.6% and 2.3% respectively, thanks to increased demand for air-conditioning caused by higher temperatures in the latter half of June.
Large industrial user demand, on the other hand, which is closely related to business activity, continued to be depressed by the sluggish economy. Although the severity of the downturn appears to be diminishing, negative growth was recorded for the 18th month in a row. This unwelcome record is equal to that recorded at the time of the first oil shock between June 1974 - November 1975, which was the longest in FEPC history.
However, it appears that change is on the horizon. Although the cement and textile industries dropped sharply compared with the previous year, the decline in other industries is slowing, and some have recovered to 1998 levels. By company, the rate of decline at all electric power companies except Hokkaido and Shikoku has lessened. Some companies, including Tokyo Electric Power Company, recorded the same demand level as last year.
However, the government's Monthly Economic Report indicates that job creation and income show no sign of recovery, and that private investment continues to decline. Given this situation, it is difficult to make any clear-cut projections regarding the future. Nonetheless, although the economy is still in the doldrums, electricity demand trends give some hope for recovery.
Amidst this severe environment, summer -- when electricity use reaches its peak -- is at last upon us.
As you know, the most important factor affecting summer electricity demand is temperature. According to weather bureau forecasts for July - September, we should have a hot summer this year.
In Reference Document 1, you can see that we are expecting peak load demand this summer of 176.64 million kWh.
For the past three years, peak load demand across the ten electric companies has been below 171.13 million, the all-time high recorded during the hot summer of 1995. This is the first time that peak load demand records have stood for more than two years in the absence of negative factors such as a major 'oil shock'.
However, as is shown in the graph(Trend of shipment of Air Conditioners) on page 2, 22 million air conditioners were sold in the 1996-1998 period, and an additional 6.8 million units are expected to be shipped this year. As a result, even if we have normal summer weather, electricity demand this year will probably outpace 1995 levels by about 5.5 million kW.
On the supply side, thermal plants and other power generating facilities have steadily increased (please refer to the chart "Major New Power Plant Operations Begun or will be operational from Sep.'98 to Aug. '99" and "IPP Operations Begun in 1999"). In addition, one million kW-scale IPP (Independent Power Plant) operations have resulted in a power supply increase of approximately 4 million kW since last summer. This means we will have a supply reserve ratio of about 12% for this year's summer period.
Demand Side Management (DSM) measures are, of course, being taken to shift and balance peak loads. We are continuing to offer "supply and demand adjustment contracts" (Please refer to the Appendix 2) with attractive rate scales, which successfully reduced loads by about 7.8 million kW across the country last summer. This summer, we are working to expand the number of users who participate in this program.
Other DSM measures include thermal storage systems and equipment, and we have been successful in expanding our "Eco Ice" and "Eco Vender" programs.
With support from electric companies, "Eco Vender" installations have increased by about 680,000 units during the last five years. These installations account for 30% of the approximately 2.09 million units in use across the country, and have resulted in a peak shift of about 340,000 kW.
Installations of "Eco Ice" thermal storage systems have also increased, reaching 4200 households nationwide by the end of April 1999 for a savings of approximately 0.25 million kW.
DSM measures such as these allow us to contain the need for more power supply facilities, and by promoting efficient electricity use, they are helpful in slashing supply costs. As such, we will continue to do our best to expand DSM measures in the future.
Next, speaking as president of the Chubu Electric Power Company, I would like to describe several major projects that are under way in the Chubu district.
As you know, the Chubu district is a key manufacturing center. In preparation for the coming century, Chubu has worked hard to foster new venture businesses and create new industries that will fuel future development. In addition, I believe the Chubu district has the potential to become an international hub for cultural exchange and human resource development.
As part of our efforts to bring growth to the district, two major projects are being undertaken: the Aichi World Expo and the Chubu International Airport.
Chubu residents have high hopes for these projects, and our own Chubu Electric Power Company is lending its support to help them succeed.
With regard to the Aichi World Expo, which we have been planning since 1997, many venues have been considered. We have also done our utmost to ensure that the final plans are in harmony with the environment.
Many of you may have heard about the controversy that erupted in May when northern goshawk nests were discovered at "Kaisho no Mori", Seto City, Aichi Prefecture where the Expo is scheduled to be held.
I am happy to report, however, that the Aichi Prefectural government and various concerned agencies have come up with a plan to decentralize the Expo venue, thereby allowing the project to go ahead without impacting the northern goshawk's habitat. The resolution of this matter was of great concern to the local community, and I am delighted that the final plan is in keeping with the World Expo concept of "symbiosis with nature".
The work of reviewing plans for the decentralized Expo facilities is moving forward, and through cooperative effort, I believe that issues such as construction costs, visitor transportation and electric power supply can be successfully addressed.
The nationwide publicity that the Expo received as a result of the northern goshawk issue has actually been quite beneficial. I believe that such publicity is indispensable to the project's success, and I hope to take every possible opportunity to promote the Expo in the future. I will greatly appreciate your cooperation in this regard.
I would next like to talk about the new Chubu International Airport. Chubu International Airport Co., Ltd., was established in May 1998 with the mission of building and operating an international airport in the Chubu district.
Current plans call for the airport to be operational by 2005, but to achieve this goal, construction must begin this year. Although negotiations with the local fishing industry regarding compensation have reached a crucial stage, Governor Kanda of Aichi Prefecture himself is responsible for the negotiations, and I expect that construction will be able to move ahead as planned.
Regarding access to the new airport, Chubu International Airport Liaison Railroad Co., Ltd." was established in June of this year to handle the task of operating a rail link between Tokoname City, Aichi Prefecture and the airport offshore. Our own company, Chubu Electric Power, assisted by providing capital for the new venture. As shown by the examples of Narita, Haneda and Kansai airports, convenient access is indispensable to successful airport operations, and the new railway will no doubt make a significant contribution to the airport's success.
Finally, I would like to comment on one of the nation's most important projects — the "relocation of capital city functions."
In the Chubu district, the Tokai area, which encompasses Aichi, Gifu and Shizuoka Prefectures, has been proposed as a relocation site. Actually, there are four districts in Tokai — the Gifu Touno District, the Northern NishiMikawa District, the Southern HigashiMikawa District and the Western Shizuoka Prefecture District. There is also the Mie - Kiou district, which includes Mie, Shiga, Nara Prefectures and Kyoto prefectures. This last district can be further divided into the Kiou Kougen district, and the Mie Suzuka Sanroku District.
The national Diet and other concerned parties are currently gearing up for the task of making relocation site candidate selections in November of this year. In advance of this, the Federation of Economic Organizations and eight regional economic organizations issued a joint declaration on July 8, requesting that the Diet and the national government move this plan forward with all possible dispatch.
Although a project of this scale tends to lead to stiff
competition between candidate areas, I believe that this is a matter
of national importance. As such, regional economic organizations
should work together to ensure that discussions are held at a
national level, and that the value and necessity of relocation are
fully understood.