Japan’s Power Output Drops for 4th Month on Recession

By Megumi Yamanaka

Dec. 12 (Bloomberg) -- Japan’s electricity generation dropped for a fourth straight month in November, falling 1.8 percent from a year earlier as companies such as Toyota Motor Corp. cut production and the recession deepened.

The country’s 10 regional utilities cut production to 77.17 billion kilowatt-hours of electricity last month, the Federation of Electric Power Companies of Japan said in a report released in Tokyo today. Chubu Electric Power Co., which relies most heavily on industrial users among the 10 power utilities, saw the biggest decline, of 5.1 percent.

The Cabinet Office said yesterday gross domestic product contracted at an annual rate of 1.8 percent in the three months ended Sept. 30, exceeding the 0.9 percent forecasted by economists. The central bank’s Tankan survey next week will probably show sentiment among big manufacturers sank the most in 34 years, economists predict.

“The drops would be much larger if they didn’t include sales to households and small businesses such as hotels and shopping centers,” Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities Co. in Tokyo, said by phone. “There is too much bad news around.”

Chubu Electric, which supplies central Japan, sells about 40 percent of its output to manufacturers including Toyota and Sharp Corp., the country’s biggest maker of liquid-crystal-display televisions. Sharp today announced plans to close some lines at two plants in Mie and Nara prefectures and cut 380 temporary jobs at three factories.

Negative Demand

Shosuke Mori, president of Japan’s second-biggest power producer Kansai Electric Power Co., expects declining demand for the year starting April 2010.

“No doubt it will be negative next year,” Mori, who is also chairman of the Power Federation, said today. “We had discussed next year’s performance based on the assumption of stable demand. We need to reconsider that.”

Kansai’s demand from industrial customers dropped for the first time in 13 months in November, falling 2.5 percent from a year before, Mori said. In October, sales to larger users rose 1.5 percent. Kansai Electric supplies Osaka and eight other prefectures in western Japan.

The Power Federation is due to announce sales data for each industry on Dec. 17. The following is a table of monthly electricity generation by Japan’s power utilities in billions of kilowatt-hours.

------------------------------------------------------------
Month       FY 2006          FY 2007         FY 2008
                  %Change          %Change         %Change
------------------------------------------------------------
April       73.67     3.7    75.05   1.9     75.39     0.5
May         72.87     3.6    74.62   2.4     75.78     1.5
June        77.38    -0.3    79.09   2.2     77.84    -1.6
July        87.30     1.2    85.96  -1.5     94.12     9.5
August      93.34     3.4    96.20   3.1     90.93    -5.5
September   79.48    -2.5    86.27   8.5     82.98    -3.8
October     76.22     2.2    78.22   2.6     77.55    -0.9
November    76.31     2.2    78.61   3.0     77.17    -1.8
December    85.65    -2.9    87.13   1.7
January     86.18    -1.8    90.42   4.9
February    78.24    -1.6    88.46  13.1
March       83.82     1.5    83.49  -0.4
-----------------------------------------------------------
Full Year   971.3     0.7  10,034.9  3.3
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Source: Federation of Electric Power Companies of Japan.

To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.