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People walk on a street at Ginza shopping district in Tokyo on Tuesday. The temperature in the metropolitan area of Tokyo topped 31C.Shizuo Kambayashi

From the lex blog at the Financial Times

If there was one thing Japan didn't need right now, it was a heatwave. Overnight lows this week in Tokyo have not been far off the typical daily maximum for June, threatening the nationwide push to conserve power.

Data from Tokyo Electric, the utility most affected by the March tsunami, shows that its 29 million customers are now consuming only fractionally less electricity than they were this time last year. On Wednesday afternoon, demand peaked at 93 per cent of the available capacity.

Something has to give.

Despite radiation leakage into air, soil and sea, the central government says it is still committed to nuclear power as one of its "four pillars" of energy policy. Yet opposition from local authorities may mean that facilities remain shut down indefinitely. Of the 54 domestic reactors, 35 are currently idled, and given the 13-month inspection cycle, the rest could be shut within a year. That would close off the source of 29 per cent of Japan's power last year.

In that scenario, Japan's ten electric utilities conceivably could boost capacity by deferring scheduled overhauls of hydroelectric and thermal plants. But the fact that three of them (Chubu, Kansai and Kyushu) have joined Tepco among the world's ten worst-performing credit default swaps this year implies that investors are positioning for big production shortfalls.

As yet, Japan Inc. is not: May's industrial production data showed that factory output fell more steeply (down 5.9 per cent, year-on-year) than industrial electricity consumption (-3.4 per cent), for a third successive month. Some of Tepco's suggestions to alleviate discomfort after switching off the aircon - wind chimes, soothing colours and aromatic scents - may seem risible.



But Japan has the fourth highest electricity consumption per capita and the second highest dependence on imported energy. One way or another, it will have to start using less of it.

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