Kansai Electric Power - Company History

The Kansai company created by the reorganisation of the electricity industry

On 1 May 1951, under the Electricity Utility Industry Reorganisation Order, Nippon Hassoden 日本発送電 and the nine regional distribution companies were dissolved, and nine new companies were established to carry out generation, transmission and distribution as a single business[1]. Kansai Electric Power was one of them, incorporated with capital of $4.7M (¥2bn)[2] against contributions in kind of $2.3M (¥840m) from Nippon Hassoden and $2.4M (¥850m) from Kansai Haiden 関西配電[3]. At the outset it held 2.28m kW of generating plant — 1.13m kW hydro and 1.15m kW thermal[4] — sold 5,655m kWh a year and had 2,683,000 customer accounts at the fiscal year end[5]. Hori Shin (堀新) became chairman and Otagaki Shiro (太田垣士郎) president[6], with the head office at Umegae-cho, Kita-ku, Osaka[7]. The shares were listed on the Osaka Stock Exchange in July of that year and on the Tokyo Stock Exchange in August[8]; of the 3.38m shares of ¥500 par value, 1.70m came from the Kansai Haiden side and 1.68m from Nippon Hassoden[9].

The problem the new company faced immediately was that supply could not keep pace with demand, which was rising by roughly 10 per cent a year across its service area[10]. Even a plan to develop 970,000 kW over the three years from fiscal 1951 to fiscal 1953 — 650,000 kW of hydro and 320,000 kW of thermal[11] — still left a projected shortfall of more than 3bn kWh a year in a normal water year[12]. In 1951 Kansai Electric applied to the Public Utilities Commission for a tariff revision and was granted increases of 40 per cent on flat-rate lighting, 26 per cent on metered lighting and 31 per cent on large-lot lighting[13]. The application cited rising material and personnel costs, higher repair spending as demand grew, and higher depreciation[14]. Thereafter the company absorbed cost increases through rationalisation, and left its tariffs unrevised from October 1954 until 1968[15].

Kurobe No. 4, and the fault zone that stopped the work

By the middle of the 1950s hydroelectric development had reached its national peak, with large sites such as Sakuma, Tagokura, Miboro and Okutadami entering construction one after another[16]. Development on the Kurobe river had been planned by three parties — Hokuriku Electric Power, the Electric Power Development Company and Kansai Electric[17] — and in May 1956 the Electric Power Development Coordination Council named Kansai Electric as the developer[18]. In June the company announced its plan for the Kurobe No. 4 power station, rated at 258,000 kW[19]. In July it opened a construction office at Omachi in Nagano prefecture and let the contracts section by section on a negotiated basis[20]. Kumagai Gumi took the third section, running from Omachi through Mount Akazawa to the dam site; Hazama built the arch dam itself, 182m high with a crest length of 526m[21]; Taisei Corporation built the power station 150m underground; and Kajima, Sato Kogyo and Shimizu Corporation each took further sections[22].

The work ran into an 80m fault fracture zone on the Omachi route, Typhoon No. 7 struck the dam site, and the Kurobe route and the underground power house were beset by extreme heat and humidity[23]. Heavy machinery — 28-tonne dump trucks, drill jumbos, rocker shovels and very long belt conveyors[24] — was assembled to force a way through, and the cost swelled from an initial $102.8M (¥37bn) to more than $138.9M (¥50bn)[25]. The completion ceremony was held in June 1963[26]. It was through great works of this kind, Sakuma and Kurobe No. 4 foremost among them, that mechanisation took hold in Japanese civil engineering[27]. The period in which Kurobe No. 4 advanced was also the period in which a wave of industrial capital investment swept the country[28]. Alongside its hydro development, Kansai Electric was also pushing hard into large-capacity, high-efficiency thermal plant[29].

Mihama No. 1 begins, and the concentration on Wakasa Bay

In December 1966 Kansai Electric began building Mihama No. 1, a 340,000 kW pressurised-water reactor at Mihama in Fukui prefecture[30]. In the same month Tokyo Electric began work on Fukushima No. 1, a 460,000 kW boiling-water reactor[31]; Mihama No. 1 entered service in November 1970 and Fukushima No. 1 in March 1971[32]. The two companies diverged on reactor type, Kansai Electric adopting the pressurised-water design of Westinghouse of the United States[33]. Securing nuclear fuel was a further problem: in December 1967 eight electric utilities including Kansai Electric signed a long-term uranium concentrate purchase contract with Denison Mines of Canada, and in January 1968 another with Rio Algom[34]. The Denison contract covered 10,500 short tons of uranium octoxide over ten years from 1969, the Rio Algom contract 5,160 short tons over the same period[35].

By 1973 Kansai Electric had committed to a nuclear programme of 5,668,000 kW including plant already in service, a scale close to Tokyo Electric’s[36]. The idea of shifting in one movement from thermal to nuclear left a hard problem behind it — securing the generation that would bridge the gap[37]. New sites proved difficult too, with plans such as the Nachikatsuura nuclear station in Wakayama prefecture blocked by local opposition[38]. The pressurised-water reactors it had adopted suffered a run of faults[39], and Mihama No. 1 was shut down less than two years after it began operating[40]. Kainan thermal No. 3, then the largest and most advanced single unit, exploded during trial running[41]. Nuclear stations took more than five years to build against less than two for thermal[42], so the financing burden was heavier. Even so, the start-up of Mihama No. 1 in 1970 was the first commercial operation of a pressurised-water nuclear station by a Japanese electric utility.

The 1973 power crisis and the price of the tariff freeze

In the summer of 1973, peak-cut orders requiring large customers to reduce consumption by an average of 20 per cent were issued nine times across the Kansai Electric service area[43]. In 1972 not one had been issued[44]. The Osaka bureau of the Ministry of International Trade and Industry resorted to administrative guidance, asking for voluntary savings of 15 to 20 per cent whenever a photochemical smog warning was issued[45]. Prefectural governments including Hyogo pressed hard for cuts in the fuel burned at power stations[46]. Switching off office lighting and air conditioning was not enough, and steel and chemical makers shut down parts of their production lines even while under orders to raise output[47]. On 20 June, Kansai Electric applied to MITI for a first round of increases — an average of 15.8 per cent on lighting tariffs and 35.2 per cent on power tariffs[48].

For the nineteen years leading up to that application, Kansai Electric had left its tariffs alone[49]. This stood in contrast to Tokyo Electric, which had revised its own in 1961[50], and it followed from the principle laid down by the first president, Otagaki Shiro: precisely because the electricity business is granted a regional monopoly, it must make a particular effort to rationalise its management. That principle passed on to Ashihara Yoshishige (芦原義重) and Yoshimura Seizo (吉村清三)[51]. At the end of fiscal 1966 the equity ratio was 38.5 per cent at Kansai Electric against 26.9 per cent at Tokyo Electric, a gap of more than ten points[52]. Capital spending rose from $293.6M (¥106bn) in fiscal 1968 to $959.1M (¥295bn) in fiscal 1972, approaching Tokyo Electric’s $1.0B (¥315bn)[53]. Revenue, at $623.7M (¥192bn), was well below Tokyo Electric’s $1.1B (¥332bn), so relative to the size of the business the investment burden was heavy[54]. Ashihara, by then chairman, observed that a 13.7 per cent increase in 1961 matching Tokyo Electric’s would have brought in an extra $138.9M (¥50bn) a year[55].

Siting generation became the heaviest constraint on Kansai Electric[56]. Demand in its area was concentrated from Osaka Bay along the Inland Sea coast, close to the coastal thermal stations, so both transmission investment and transmission losses were small[57]. As pollution became a political issue, however, building or expanding thermal plant in densely populated areas grew impossible, and most of the coastline left for a move to remoter sites was national park or quasi-national park[58]. The plan for a second Tanagawa thermal station in Osaka prefecture set the company against Governor Kuroda (黒田知事) and local residents, and in Kyoto prefecture the siting of the new Miyazu thermal station failed to win the consent of Governor Ninagawa (蜷川知事) from 1965 onwards[59]. In August 1973 the company decided to require boiler makers such as Mitsubishi Heavy Industries and Hitachi to submit written guarantees stating explicit nitrogen-oxide removal rates[60], and told each local authority of a plan to modify the boilers at every thermal station in its area during fiscal 1974 so as to cut emissions by 40 to 50 per cent against the fiscal 1970 level[61].

Tighter safety regulation, and siting the fuel cycle

The accident at the Three Mile Island nuclear station in the United States in March 1979 carried through into Japanese regulation[62]. On 14 April the Nuclear Safety Commission took the exceptional step of ordering Kansai Electric to shut down Ohi No. 1, a 1,175,000 kW pressurised-water unit[63] then running, and to carry out a safety analysis of its emergency core cooling system[64]. The analysis found no problem and Ohi No. 1 restarted in June[65]. For the other seven pressurised-water units the conclusion was that safety could be assured by adding a new circuit to the emergency core cooling system[66]. Kansai Electric had begun operating Mihama No. 3 in 1976, and several nuclear stations now stood side by side along the Wakasa Bay coast.

Handling spent nuclear fuel became a problem common to the whole industry. Kobayashi Shoichiro (小林庄一郎), president of Kansai Electric, became chairman of the Federation of Electric Power Companies at the end of June 1984[67], and in July formally asked Aomori prefecture and the village of Rokkasho to accept three facilities: reprocessing, uranium enrichment and low-level waste storage[68]. The reprocessing plant was planned for an annual throughput of 8,000 tonnes of uranium at a construction cost of about $2.9B (¥700bn)[69]; the enrichment plant for roughly 1,500 tonnes SWU a year at about $673.6M (¥160bn); and the low-level waste store for the equivalent of some 3m drums[70]. In April 1985 Aomori prefecture and Rokkasho formally notified the Federation that they would accept the siting[71]. In 1987 Ashihara Yoshishige, who had held real power for more than thirty years, was removed from the board, with chairman Kobayashi Shoichiro and Akiyama Yoshihisa (秋山喜久), a later president, playing the central roles.