"Industry will have to change working patterns... people will just have to get used to the heat"

Japan is a country that has already adopted many energy efficiency and conservation measures over the decades. It's citizens and businesses will be hard-pressed to conserve even more in the face of power shortages that look as if they will be the norm in the foreseeable future. (GW)

Saving Power Is A New Priority

By Chester Dawson
Wall Street Journal
March 28, 2011

TOKYO—As Japan slowly comes to grips with the devastation created by its earthquake and tsunami and ensuing nuclear crisis, a debate is emerging in business and political circles about how to do more with less electricity—or just do less.

After years of debate, Japanese policy makers have finally begun seriously to consider for the first time in six decades instituting daylight-saving time this summer, which would reduce energy demand in the early mornings and evenings. Japanese companies also are weighing reducing hours worked—and wages paid—at offices and factories.

As a result, Tokyo households could face higher utility bills and blackouts during the hottest summer months, when air conditioners usually are cranked up to maximum power.

The sudden push to save electricity comes as several power plants that served the Tokyo area were temporarily or permanently knocked out of service by the March 11 quake, including the damaged Fukushima Daiichi nuclear plant that has been leaking radiation.

Prime Minister Naoto Kan's government has set up a special task force of cabinet-level officials charged with coming up with a set of policy prescriptions and recommendations. As part of that initiative, government ministries are reaching out to industry groups to coordinate their efforts.

"Everything is being examined from a zero basis, without any favor or prejudice," said Noriyuki Shikata, a spokesman for the cabinet. "As one of the world's most energy-efficient countries, our margin for additional conservation is rather limited, but we don't have any choice."

In response to calls for conserving electricity, many businesses in Tokyo already are operating with dimmed lights, prompting some to post "open for business" signs on front entrances. The Tokyo metropolitan government turned off about half the city's street lights and many elevators in public facilities in the aftermath of the quake. Train service has been suspended on several routes because of the power shortage. Even the wattage of ubiquitous vending machines on nearly every street corner has been turned down.

But those efforts may not be nearly enough as the heat and humidity of summer approache, threatening to paralyze Japan's capitol city.

Tokyo Electric Power Co., or Tepco, hopes to end its rolling blackouts by late April as it races to bring mothballed or underutilized generators—mostly powered by fossil fuels—back on line. Even so, it estimates that the gap between supply and demand during the peak summer months will balloon to one million kilowatts, or about 20% of total usage.

Despite relatively high prices for electricity by global standards, Japan has grown accustomed to ample supplies over the past two decades. Even as the population remained virtually unchanged between 1990 and 2009, electricity usage surged almost 35% over the period, according to data from the Federation of Electric Power Companies of Japan.

The sudden shortage of electricity in and around Tokyo could trigger a supply-side shock to Japan's economy the likes of which it hasn't experienced since oil prices spiked in the 1970s. BNP Paribas cites the electricity "bottleneck" and supply-chain disruptions in its forecast for negative growth for the next two quarters, which it expects to act as a drag on overall growth and to induce a 0.9% contraction in gross domestic product in fiscal 2011.

Businesses in areas covered by the two hardest-hit utilities, Tepco and Tohoku Electric Power Co., account for half Japan's total economic output and 45% of its manufacturing. Nomura Securities says the shortfall in electricity mid-summer and mid-winter could wipe out about 1.4 trillion yen ($17.19 billion) in pretax profits, or an average of about 5% at Japan's 400 biggest companies.

In an editorial Sunday, the Nihon Keizai, Japan's largest business daily, called on Japan's two main industry associations to take the lead in organizing "rotating holidays" to reduce demand everywhere from gritty factory floors to fancy department stores.

Due to a 100-year-old historical quirk, the power shortages Tokyo faces can't be remedied by sending more voltage from western Japan, which was largely unaffected by the quake. While Tokyo uses 50-hertz electricity, its western rival Osaka uses 60-hertz power—a discrepancy stemming from Japan's crash industrialization program in the 1890s when Tokyo chose German-made generators and Osaka adopted U.S. generators. The shortfall in eastern Japan is 10 times what substations are capable of converting from east to west, according to BNP Paribas.

That has spurred Japanese leaders to consider taking drastic measures. Few executives have broached the topic of shorter working hours openly, but a top official at a major Japanese manufacturer who declined to be named said reduced work shifts are likely in order to cope with the lack of electricity. "Industry will have to change working patterns, and people will just have to get used to the heat," the official said.

Neither step would be completely without precedent: before World War II, government officials in Japan worked only until noon during the peak summer months, and under the U.S. occupation period after the World War II, Japan instituted daylight-savings time until 1952. But the issue of daylight savings has been surprisingly contentious in Japan, where some have viewed it as a way to extend the work day or rehash postwar memories.