As this is the first press conference not only of a new year, but a new
century, I would like to share with you my own personal resolutions for
the future.
For those of us in the electric power industry, the new century has brought
with it a new age of direct competition. In effect, it represents the beginning
of an entirely new business model for the power industry. Although the
pace of change is becoming ever more rapid, if we reflect on where we stand
today, and dedicate ourselves to preparing for the future, we have nothing
to fear. But we must clear in our judgments, and "change what needs
to be changed" while "standing fast where we need to stand fast."
It goes without saying that the former expresses our stance with regard
to competition, and the latter expresses our stance with regard to our
mission as public utility providers.
Speaking as president of the Chubu Electric Power Company, the first order
of business is to ensure that our management is able to appropriately and
flexibly respond to anticipated market changes. Secondly, we need to respond
to competition by accelerating the pace of operational review, and in the
light of profitably and profit management issues, secure our revenue goals
for the future. Thirdly, we need to seriously consider -- and try to respond
to -- the service needs of our customers.
We must study market and customer trends, and -- without being bound by
business and sales conventions of the past - even consider the possibility
of new business alliances in our efforts to respond in a flexible and timely
manner.
These, then, are my feelings as we set sail on the uncharted waters of
the 21st century. It is with a deep sense of the enormity of the task ahead
that I undertake this voyage, and before moving on to the main topics of
today's conference,
I would like to take this opportunity to ask for the support of all press
club members in the year ahead. I would now like to turn to today's topics.
The first is the electric power industry's response to the report issued
by the sub-committee report on global warming issued by the Planning and
Policy Committee of Central Environment Council. The second is the electric
power supply and demand from late December to early January.
With regard to the sub-committee report on global warming issued by the
Planning and Policy Committee of Central Environment Council, I would like
to draw your attention to the information shown in Reference Document 1-2.
As you know, the Central Environment Council advises the Minister of the
Environment. Last December, Sub-Committee of the council's Planning and
Policy Committee issued a report on measures to combat global warming.
The report outlined five different policy models by which Japan can meet
the targets specified in the Kyoto accord, that is, a 6% reduction in greenhouse
gas production based on 1990 benchmark levels. In a addition to voluntary
efforts, the five policy models included regulatory measures and economic
measures such as emission exchange agreements and environmental taxation.
The contents of the report will be subject to further discussion by the
Central Environmental Council under the auspices of the newly established
Ministry of the Environment, and call has been issued to solicit the input
from the general public.
The electric power industry continues to adhere to the following three
tenets with regard to the issue of global warming.
First, we believe that it is a global problem that cannot be solved by
a single nation. Second, we believe that a long-term solution must be sought.
Third, we believe that the problem cannot be addressed without also considering
the day-to-day life and economic activity of the nation's citizens.
Based on these beliefs, we have submitted a response that is outlined in
Reference Document 1-1. Our first point is that it is essential to assess
the problem from a comprehensive, global standpoint. It is not a problem
that can be addressed by a single country, and with COP 6 about to be reconvened,
the matter of appropriate timing needs to be considered. With regard to
the five policy models, emphasis is placed only on thorough emissions management.
But we need to look at the issues from a broad perspective and consider
how the nation's economy will be affected. We need to consider whether
the policies will be fair with respect to transport, civil administration
and industry. And we need to consider the nation's energy security.
Our second point is that we must seek long-term solutions, and that they
must remain effective long after the year 2010. We need to consider whether
economic and regulatory measures are the right approach to take, and thoroughly
discuss the side effects they may have on the nation's economy and the
lives of its citizens.
Our third point is that it is essential to consider measures that the public
will cooperate with, and in which voluntary action is respected. In order
for measures to receive the understanding and support of the nation's citizens,
the steps the nation will take to achieve its goals must be explained in
a manner that is easy to understand.
The nation's current global warming prevention measures are based on guidelines
established in June 1998, and have just begun to get underway. If we are
to reconsider those measures, we need to first evaluate our current progress,
and conduct a "check and review" to determine how they can be
improved. In view of the liberalization that is occurring in a wide range
of fields, and increasing calls for greater personal responsibility, we
need to consider flexible policy packages based on voluntary efforts.
Based on the above factors, we believe that of the policy models proposed,
Model 1 is the one that should be the focus of future discussions.
As part of the recent government reorganization, the Environmental Agency
has been elevated to ministry status. While focusing on the environment,
we hope that the new Ministry of the Environment will also give careful
consideration to the economy, a stable power supply, and other factors
that are vital to society, and formulate policies from an even broader
perspective than in the past.
I would now like to turn to the subject of electric power supply and demand
during the year-end and new-year period. Details are shown in Reference
Document 2.
With respect to the weather, cold air flowed down over northern Japan,
and the traditional winter weather pattern of "highs to the west and
lows to the east" affected most of the nation. Skies on the east coast
were generally clear, while snow fell on west coast. Average temperatures
nationwide were 1.9C lower than for the same period last year.
As a result, looking at the total across all 10 FEPC member companies,
the lowest figure recorded for maximum demand was up by 6.1% to 87.11 million
kW, and the lowest figure recorded for minimum demand was up by 7.2% to
61.22 million kW.
Along with the Golden Week holiday period in May, the year-end/new-year
holiday period is when demand for power traditionally drops to its lowest
level. Totals across the 10 companies renewed their record for the first
time in five years on August 25 of last year with 173.07 million kW purchased.
But when we compare the recent figures with this, we can see that the lowest
figure for maximum demand reached only 50% of last summer's level, and
the lowest figure for minimum demand reached only 35% of that level.
Because electric power is a resource that cannot be stored, we must build
facilities that allow us to handle the highest level of demand. But I would
like to take this opportunity to remind you of the wide discrepancy between
the periods when we utilize our generating facilities to the fullest and
the periods when we are forced to operate them at less than capacity.
These seasonal differences in demand, as well as differences in daytime
and nighttime demand, reduce the utilization rate of our facilities and
contribute to higher costs. In the future, we will continue to do our utmost
to reduce the gap between periods of high and low demand.
We cannot let down our guard even when demand is low. Rather, we must be
especially alert to sudden increases or changes in demand, and we must
prepare for emergencies that can be brought on by extremely cold weather.
For those of us committed to providing a stable power supply, there are
no year-end or new-year holidays.
Recently, usage of heater/cooler-type air conditioners and electric carpets
has increased, and power demand in the winter season is showing the same
tendency to fluctuate widely in response to slight changes in temperature
that we see during the summer season. For example, a one degree drop in
the temperature can cause an increase in demand of approximately 1.75 million
kW - far more than the amount of electricity that can be produced by a
large-scale power plant. (Corresponding temperature-related changes in
the summer of 2000 were approximately 5 million kW.)
In view of these facts, the total across the 10 companies reached its highest
level on January 15, when it was extremely cold, reaching a total of 149.55
million kW. This was the highest winter level recorded in three years,
and represents an increase of 6.04 million, or 4.2% over the previous record.
With even colder weather likely to come, we can probably expect demand
to reach as high as 149.79 million kW.
It seems that this year we are experiencing a real winter for the first
time in several years. I hope that this will lead to higher sales of winter
season goods, and an increase in consumer spending.