Is TEPCO’s petroleum use doubled?

Tokyo Electric Power Company (TEPCO) forecasts that it could post about JPY410 billion of operating losses in the whole fiscal year 2011-12 due to the increasing expenses for thermal power fuel.

However, the company’s predictions for the electricity demand and the fuel consumption are seen overestimated.

TEPCO forecasts that its electricity sales in the fiscal year 2011-12 will be at 267.1 billion kWh, down 9.0% on year.

The company’s electricity sales in the first half of the fiscal year decreased by 13.6%, it means that the electricity sales between October 2011 and March 2012 should stay at only 4.4% decline from a year earlier.

The less decrease is likely to boost TEPCO’s petroleum consumption for the thermal power generation in the second half of the fiscal year by more than 200% on year, the company says.

Actual consumption of fuel oil in the first half of the fiscal year slightly increased by 0.3% on year, while crude oil use decreased by 41.1% from a year earlier. Compared with the first half results, forecasts for the second half seem to be too much.

According to the TEPCO’s explanation, its Liquefied Natural Gas (LNG) consumption for the thermal power generation during the second half of the fiscal year is expected to be same as that in the first half.

TEPCO may not worry about the shortage of power supply for coming several months, because the maximum electricity demand in the winter season should not be higher than summer.

Or, TEPCO may not secure more LNG due to a lack of tanker availability following higher LNG demand from other Japanese utility companies that have lost nuclear power generation capacity.

TEPCO’s nuclear power plant usage is also forecasted to decline to 18% in the second half on the fiscal year compared to 25.1% in the previous period.

Four units at its Kashiwazaki-Kariwa nuclear power plant were still operated after the 3.11 earthquake, but two of them were shut in August due to the regular maintenance. Rest of the nuclear units is also scheduled to be shut for maintenance in early 2012.

Decreasing nuclear power supply and limited LNG supply could boost petroleum usage at TEPCO’s thermal power plants if the decline of electricity demand stays at 4.4% in the second half of the fiscal year. It must be a clear picture.

However, we saw that strict power saving efforts after the earthquake and lower industrial activities caused by a lack of electricity supply have reduced electricity demand in the TEPCO’s service area during the first half of the fiscal year by 13.6% on year. Electricity supply in October continued to decrease by 9.4% on year.

The October figure suggests that electricity demand in the second half of the fiscal year is likely to decline by about 10% on year, not a low number like 4.4%

TEPCO is expected to use 140,000 bbl/d more petroleum than the same period a year ago based on the company’s forecast. But the extra oil usage could be about only 45,000 bbl/d if decline of power demand reaches at about 10% on year.