Business Performance Fluctuations Driven by Seasonal Electricity Demand, Supply-Demand Mismatches and the Timing of Subsidies

「The monthly simple averages of the system price on the Japan Electric Power Exchange (JEPX) in April and May 2022 were relatively low at ¥17.8/kWh and ¥16.9/kWh, respectively. However, in late June, prices surged at times due to the impact of unseasonably hot weather and other factors, with individual time slots temporarily reaching ¥100/kWh.」

「Due to the unseasonably hot weather in late June, the system price on JEPX reached a high of ¥100/kWh in individual time slots, while the monthly simple average system price in the June day-ahead spot market reached ¥21.3/kWh.」

「Given the tendency for electricity trading prices on JEPX to rise during winter, electricity procurement corresponding to the scheduled supply volume had been fixed at predetermined prices in advance. As a result, procurement was largely unaffected by the surge in JEPX electricity trading prices this winter」

「In response to the surge in electricity prices on the Japan Electric Power Exchange (JEPX) from mid-December 2020 through late January 2021, the Company took appropriate measures, and the total contracted capacity of high-voltage customers remained stable. In addition, because part of the costs incurred in responding to the price surge was recovered from customers, both sales and profit exceeded those of the year-earlier quarter.」

「Because exceptionally high electricity prices continued for a certain period, imbalance charges for December 2020 and January 2021 totaled ¥2,701 million.」

「The procurement of liquefied natural gas (LNG), used as fuel for thermal power generation by Japanese power companies, became difficult, while a cold wave caused electricity demand to surge. As a result, from around mid-December 2020, prices on the Japan Electric Power Exchange (JEPX), which had previously remained at around ¥5–6/kWh, surged to as much as ¥80/kWh toward year-end. Consequently, sales increased, but profit fell below that of the year-earlier quarter.」

「Electricity procurement prices during the summer remained lower than usual, and as a result both sales and profit exceeded those of the year-earlier quarter.」

「By diversifying the grant-making organizations through which it can support subsidy applications, the company provides customers with optimal consulting. By expanding sales of energy-related equipment and facilities closely connected with energy-saving consulting, it aims to smooth period profit and loss.」

「In the previous year, procurement prices surged and put pressure on profit because extremely hot weather increased electricity demand. During the nine months ended the third quarter, however, weather conditions were milder than in the previous year even during summer, electricity demand did not increase, and the Company promoted efforts to contain electricity procurement prices, resulting in relatively stable procurement prices.」

「In the previous year, procurement prices surged and put pressure on profit because extremely hot weather increased electricity demand. During the six months ended the second quarter, however, weather conditions were milder than in the previous year even during summer, and electricity demand did not increase, so procurement prices remained relatively stable.」

「As a result of revising its contract structure and taking other measures to level out profit fluctuations caused by seasonal factors, both sales and profit exceeded those of the previous consolidated fiscal year.」

「Although the increase in procurement prices caused by extremely hot weather subsided, profit fell below the year-earlier period due to a temporary increase in costs associated with the review of electricity contracts.」

「Meanwhile, the increase in electricity procurement prices caused by the heat wave became a factor putting pressure on profit.」

「In the energy-saving consulting business, the company was registered and selected for four consecutive fiscal years as an energy management service provider under the Subsidy Program for Supporting Business Operators in Rationalizing Energy Use and supported many projects. However, partly because the subsidy selection rate declined, the number of the company's supported projects selected for subsidies also fell below the previous fiscal year's level.」

「However, electricity procurement prices rose unexpectedly in December 2017, causing gross profit for the nine months ended the third quarter to fall below the planned level.」

「In addition, during the cumulative second quarter of the fiscal year, profit margins temporarily declined because electricity procurement costs rose as a seasonal factor during the summer.」

「In the energy-saving consulting business, the company has been registered and selected for four consecutive fiscal years as an energy management service provider under the Subsidy Program for Supporting Business Operators in Rationalizing Energy Use and has supported many projects. However, because no subsidy grant decision was made during the cumulative first quarter of the fiscal year, the segment reported revenue of ¥745 million and a segment loss (operating loss) of ¥32 million.」

「If temperatures, humidity, weather and other factors change beyond the assumed range, losses such as imbalance charges caused by supply-demand management mismatches and declines in revenue may occur. In addition, electricity procurement unit prices are subject to higher rates during the summer, and purchase prices may rise or fall due to fuel prices, the supply-demand balance and other factors.」