TDB
New power companies withdraw or go bankrupt; approximately 40% of companies raise rates due to increased payment burden 7 times in 2 years
“New power company” business withdrawal trend survey (March 2024) ……
In this study, we compiled and analyzed the latest situation regarding the withdrawal and restart trends of new electric power companies. -Survey results (summary)-
As of March 2024, a total of 119 new electric power companies have “withdrawn” or “bankrupted or closed down” (composition ratio: 16.9%, an increase of 43.4% compared to the same month last year). This has increased seven times from two years ago (March 2022, 17 companies), accounting for just under 20% of the 706 companies registered in April 2021.
A total of 69 companies have “suspended new contracts” (9.8% of the total, down 38.4% from the same month last year), and 47 companies have “resumed” them (6.7%, up 51.6% from June 2023). Of the 87 companies that “suspended new contracts” in the previous survey, 16 companies (18.4%) have resumed their services (including some restarts).
Approximately 40% of new power companies announce rate changes and promote differentiation
[Note 1] From the Agency for Natural Resources and Energy’s “List of Registered Retail Electricity Utilities,” Teikoku Databank analyzes business withdrawal trends for “new electric power companies” excluding deemed retail electric utilities (formerly: general electric utilities). investigated about
[Note 2] The survey has been conducted five times so far (March, June, November 2022, March and June), and this is the 6th time.
*Survey results are also posted on the website below.
https://www.tdb.co.jp/report/watching/press/p240314.html
New power companies have been suffering from a “reverse
distribution” situation as power procurement costs have increased due to the sharp rise in energy prices since the end of 2020. However, in 2023, market prices will fall, and the number of final guaranteed supply contracts, which indicates the number of “power refugees” who will receive power from major power companies due to bankruptcy or withdrawal of new power companies with which they contracted, will also decline. As of March 1, there were 5,912 cases, a decrease of 87.1% compared to the peak in October 2022 (45,871 cases) (Electricity and Gas Exchange Surveillance Commission, announced on March 15). The Agency for Natural Resources and Energy will reduce the amount of relief from May in its “Measures to Alleviate Drastic Changes in Electricity and Gas Prices,” which have been implemented as a measure to alleviate the burden of soaring prices. On the other hand, the “Renewable Energy Power Generation Promotion Levy (Renewable Energy Levy),” which is operated to promote renewable energy, was raised to 3.49 yen per kilowatt hour in FY2024 for the first time in two years. In addition, with the start of operation of the “capacity market” established by the Electricity Cross-regional Operation Promotion Organization (OCCTO) in 2020 to ensure a stable supply of electricity, capacity contributions will also be charged from April 2024. The future outlook for the new electric power companies that will increase is attracting attention.
The number of companies withdrawing and going bankrupt increases by 40% in one year due to soaring energy prices
[Image 1: https://prtimes.jp/i/43465/840/resize/d43465-840-e2b12c0215f8238f78a7-0.jpg&s3=43465-840-782f09e357cc763e09be6a999b46a402-979×518.jpg] Of the 706 “new electric power companies” (registered retail electricity companies) that were registered as of April 7, 2021, those that were found to be “withdrawing” or “bankrupt or going out of business” as of March 22, 2024 A total of 119 companies (composition ratio 16.9%). This is an increase of 36 companies (43.4%) from 83 companies (11.8% as of March 2023) one year ago (as of March 2023), and a sharp seven times increase from two years ago (17 companies as of March 2022).
Looking at the breakdown, a total of 87 companies (composition ratio: 12.3%, 52.6% increase from the same month last year) have “withdrawn” (including companies that are planning to do so), and a cumulative total of 32 companies have “bankrupted or closed down” (4.5%, 23.1% from the same month last year). % increase). There was an increase of 23 companies in the category of “withdrawal” from the previous survey (June 2023). Companies that have deemed it difficult to provide a stable supply due to unstable energy prices, or that have undergone mergers or business transfers in the process of business restructuring determined by their parent company’s policies, etc. may decide to abolish their registration as a registered retail electricity business or withdraw from the business. The number of companies that have become
[Image 2: https://prtimes.jp/i/43465/840/resize/d43465-840-8453e8728cf98ddb92ca-0.jpg&s3=43465-840-9dcf1d096637f37488aa4f15bf5c135e-620×457.jpg] “Bankruptcies” include Local Electric Power Co., Ltd. (Fukuoka Prefecture, bankruptcy in December 2023, debt of 590 million yen), Smart Tech Co., Ltd. (Ibaraki Prefecture, civil rehabilitation in February 2024, debt of 4.571 billion yen) ) and group company Mito Electric Power Co., Ltd. (Ibaraki Prefecture, civil rehabilitation in February 2024, debt 480 million yen) were identified in this investigation. All three companies procure electricity for their electricity sales business mainly from external sources such as the wholesale market or other companies, and the market procurement price and the sales price to consumers were in reverse, putting pressure on profits.
A total of 69 companies have “suspended new contracts” (9.8% of the composition, down 38.4% from the same month last year), and 47 companies have “resumed accepting contracts” due to factors such as stabilization of market prices (6.7%, 51.6% compared to June 2023) % increase). Of the 87 companies that had “suspended new contracts” in the previous survey, 16 companies (18.4%) have resumed their services (including some restarts).
Approximately 40% of new power companies announce price changes Looking at the trends of the 587 companies that continue to operate, excluding the 119 companies that have “withdrawn” or “bankrupted or closed down,” 244 companies (composition ratio 41.6%) have announced changes in fees on their homepages etc. . The announcement will take the form of rate revisions, amendments to terms and conditions, and the introduction of adjustment fees such as fuel cost adjustment fees, which are a factor in fluctuations. From the fall of 2023 onwards, as the demand period has passed and the electricity market has calmed down, there are a few new power companies that are moving to lower prices, but it is expected that 90% of publicly announced companies will see their rates rise in real terms. Even in this situation, they are trying to convey their appeal and are trying to attract customers by launching a campaign that takes advantage of people moving into new homes and moving into spring.
[Image 3: https://prtimes.jp/i/43465/840/resize/d43465-840-ae866b804d16e6dca45e-0.jpg&s3=43465-840-f6e26d43c08677f9cd6fffcb3496ee52-627×197.jpg] However, changing factors are likely to occur from April onwards. The government has introduced a new market called the “capacity market” to ensure a stable supply of electricity. The market trades future power supply capacity by estimating the demand expected to be used in four years and determining the capacity needed to meet that demand. Starting in April, new power companies will be required to pay a “capacity contribution” to the market administrator, the OCCTO, in order to procure future power. As a result, some new electric power companies have begun to announce that their rates will increase in real terms.
Furthermore, on March 19th, it was announced that 10 major electric power companies are expected to raise prices starting in May due to the increase in the “renewable energy surcharge” that is added to electricity rates with the aim of promoting the spread of renewable energy. It was reported on the 21st. Although new power companies have been able to retain customers by setting rates that are cheaper than major power companies, they are in a situation where they may be able to raise prices depending on the various payments that are imposed, leaving challenges in stably acquiring customers and improving profits, and future management. There are concerns about the impact on More details about this release:
https://prtimes.jp/main/html/rd/p/000000840.000043465.html