Risks to Electricity Businesses from a Spike in Wholesale Power Prices and Inability to Pass Through Costs
First written in FY2023-Q1. 7 of 10 entries say "Mitigated", first in FY2024-Q1. Latest entry: FY2026.
Anabuki Kosan moved to the "Worse" side of this theme in 2022, 1 year before the typical company in this theme (2023).
The whole theme swung hardest in 2021: 4 of 15 companies on the "Worse" side.
7 other companies' latest entry also says "Mitigated".
- FY2026MitigatedAnnual report
「Earnings in the electricity supply business remained solid as electricity usage increased due to weather conditions and progress was made in reducing electricity procurement costs.」
The electricity supply business’s operating results improved from a loss in the previous fiscal year to a profit of ¥815 million as electricity procurement costs were reduced. - FY2026-H1MitigatedAnnual report
「Business performance remained solid as electricity usage stayed firm and progress was made in reducing procurement costs.」
Steady electricity usage and lower procurement costs helped address the risk of earnings pressure from the previous increases in fuel and electricity costs. - FY2025MitigatedAnnual report
「Electricity usage significantly exceeded the plan due to weather conditions, supporting steady electricity sales. In addition, the fuel cost adjustment charge and wholesale market prices remained stable, and progress in reducing electricity procurement prices led to a significant recovery in earnings in the electricity supply business.」
Stable fuel cost adjustment charges and wholesale market prices and lower electricity procurement prices narrowed the electricity business’s operating loss from ¥205 million to ¥70 million. - FY2025-H1MitigatedAnnual report
「The fuel cost adjustment charge and wholesale market prices remained stable, and progress in reducing electricity procurement prices led to a significant recovery in earnings in the electricity supply business.」
The impact of the negative fuel cost spread and higher electricity costs seen through the previous fiscal year was reduced by stable fuel cost adjustment charges and wholesale market prices and lower electricity procurement prices. - FY2024-Q3MitigatedAnnual report
「In addition, while the government’s measures to mitigate sharp increases in electricity and gas prices continued, the fuel cost adjustment charge and wholesale market prices remained stable, and earnings in the electricity supply business stabilized.」
Stabilization of the fuel cost adjustment charge and wholesale market prices helped address the risks of the negative fuel cost spread and higher electricity costs seen through the previous fiscal year. The operating loss narrowed from ¥656 million in the same period of the previous year to ¥102 million. - FY2024-Q2MitigatedAnnual report
「While the government’s measures to mitigate sharp increases in electricity and gas prices continued, the negative spread on the fuel cost adjustment charge incurred in the previous fiscal year was moving toward resolution, and earnings in the electricity supply business stabilized.」
In contrast to the negative spread on the fuel cost adjustment charge and higher electricity costs reported through the previous quarter, the negative spread was moving toward resolution and earnings stabilization was reported. However, the operating loss continued because the subsidy program reduced electricity charges. - FY2024-Q1MitigatedAnnual report
「The fuel cost adjustment charge, which rose sharply last year, remained stable, while progress in passing through costs following the regulated tariff revisions implemented by 7 regional electricity utilities for usage from June 2023 helped stabilize earnings in the electricity supply business.」
In contrast to the negative spread on the fuel cost adjustment charge and higher electricity costs reported through the previous quarter, stabilization of the fuel cost adjustment charge and progress in passing through costs following regulated tariff revisions were reported. - FY2023-Q3WorsenedAnnual report
「As a result, revenue from the energy-related business was ¥4,814 million, up 12.0% year on year, and the operating loss was ¥656 million, compared with operating profit of ¥391 million in the same period of the previous year. The main reasons for the operating loss were the negative spread on the fuel cost adjustment charge and the sharp rise in electricity costs.」
The negative spread on the fuel cost adjustment charge and higher electricity costs continued, and operating results deteriorated from a profit of ¥391 million in the same period of the previous year to a loss of ¥656 million. - FY2023-Q2WorsenedAnnual report
「As fuel costs rose and the fuel cost adjustment charge reached its cap in all regions, we revised the terms of service and changed the fuel cost calculation method in order to continue providing services. As a result, revenue from the energy-related business was ¥3,238 million, up 25.2% year on year, and the operating loss was ¥82 million, compared with operating profit of ¥158 million in the same period of the previous year. The main reasons for the operating loss were the negative spread on the fuel cost adjustment charge and the sharp rise in electricity costs.」
The inability to pass through costs, which had occurred in some regions in the previous filing, expanded this time to a situation in which the fuel cost adjustment charge reached its cap in all regions, resulting in an operating loss due to the negative spread on the fuel cost adjustment charge and higher electricity costs. - FY2023-Q1MaterialisedAnnual report
「Electricity procurement prices rose sharply, partly due to the surge in wholesale electricity market prices. In some regions, the fuel cost adjustment charge reached its cap under the regulated tariffs of deemed retail electricity providers, resulting in regions where costs could not be passed through to customers.」
The surge in wholesale electricity market prices drove up electricity procurement prices, and some regions actually reached the cap under regulated tariffs, making it impossible to pass costs through to customers.