Japan Wholesale Power Price Climbs 26.3% Amid Higher LNG and Coal Prices

Japan’s day-ahead wholesale electricity price climbed 26.3% for Oct. 20 delivery amid higher LNG and coal prices and a separate decline in available generating capacity, though household bills do not move in step.

The system price at the Japan Electric Power Exchange (JEPX) reached 31.15 yen per kilowatt-hour, up from 24.66 yen for Oct. 13 delivery. The dates identify when the electricity was due for delivery in Japan; JEPX’s day-ahead market trades power for the following day.

The estimated average spot price for liquefied natural gas (LNG) scheduled for December delivery into Northeast Asia reached $29.30 per million British thermal units on Oct. 16, compared with $26.50 the previous week. Newcastle coal futures stood at $150.40 per metric ton on Oct. 16.

Available generating capacity on Oct. 19 was about 12% below the level for the same day a month earlier as some plants entered scheduled maintenance. That capacity measure precedes the Oct. 20 electricity delivery date.

“Persistent risks around the Strait of Hormuz continue to underpin the geopolitical premium embedded in gas prices,” said Arturo Regalado, a senior LNG analyst at Kpler.

The 26.3% wholesale increase does not mean household electricity bills rose by the same amount. The fuel-cost adjustment in regulated bills changes monthly using a three-month average of fuel trade prices from three to five months earlier. Some market-linked plans incorporate JEPX spot prices.