Japanese power industry to reduce investment

The electric power industry and its supervising organ, the Ministry of International Trade and Industry (MITI), is considering substantially reducing investment in construction of new power facilities. The step is aimed at achieving the government's goal of cutting electricity charges in Japan by around 20% before 2001 by rectifying the high-cost structure of power generation. The power industry and MITI determined that increasing depreciation costs and heavy interest payments stemming from overinvestment in new power facilities are chiefly responsible for electric power rates in Japan being far above international levels. They noted that Japan's power facilities are 10% less efficient than those in Europe and the United States because they are built to meet peak power demand in summer. Combined plant and equipment investment by Japan's major electric power companies are estimated at 4.8 trillion yen in fiscal 1996, up 5.6% from the preceding year. Instead of building new plants, the power industry and MITI will secure additional power by storing electricity generated during the night and by procuring more electricity from business corporations.