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"Fuel cost adjustment system" is a system designed to automatically adjust monthly electricity fees based on fluctuations in (actual recorded) fuel prices for crude oil, liquefied natural gas (LNG) and coal.

Mechanism of Fuel Cost Adjustment System

The electricity fee adjustment shall be made, using a predetermined method for calculation, on the basis of fluctuations between a 3-month (actual recorded) average fuel price and the standard fuel price (i.e., the fuel price used as the basis for electricity rates).

< Period for Estimating Fuel Costs & Application to Electricity Fee >

A fuel cost adjusted unit prices for every month shall be calculated on the basis of average fuel prices actually recorded for 3 months.
For example, a fuel cost adjusted unit price calculated on the basis of (actual recorded) average
fuel prices from January to March, shall be applied to electricity fees for June.

[Conceptual Diagram]

< Upward & Downward Adjustment for the Fuel Cost Adjustment System >

If a 3-month (actual recorded) average fuel price is above the standard fuel price, an upward adjustment shall be applied, while if below the standard fuel price, a downward adjustment shall
be done.



* If the "average fuel price" is above 66,300 yen (standard fuel price (44,200 yen) x 1.5 (values less than 100yen to be rounded off)), this 66,300 yen shall be the maximum price. In this case, for the portion of the average fuel price beyond 66,300yen, no adjustment is to be applied.


Method of Fuel Cost Adjustment

< Electricity Fee Calculation >

Monthly electricity fees shall be calculated by adding (when fuel prices rise) or subtracting (when fuel prices fall) a fuel cost adjustment amount (defined as a fuel cost adjusted unit price multiplied by the monthly energy consumption).

[Case for a Metered System]


* Tax Inclusive Equivalent (including consumption tax, etc.)= Electricity Fee x 8/108 (rounded down to the nearest yen)
* In a case of no electricity consumption, the demand charge shall be discounted by 50% (excluding meter-rate lighting A or 10A/15A of meter-rate lighting B).
* For a bank transfer payment, 54 yen shall be subtracted from monthly electricity fee.



< Formula for Calculating Fuel cost Adjusted Unit Price >

The fuel cost adjusted unit price is calculated based on the average fuel price and the standard unit price.

[Upward Adjustment]  If the average fuel price is above 44,200 yen


[Downward Adjustment]  If the average fuel price is below 44,200 yen


* If the average fuel price is above 66,300 yen, this 66,300 yen shall be the maximum price. In this case, for the portion of the average fuel price beyond 66,300yen, no adjustment is to be applied.
* The fuel cost adjusted unit price is rounded off to the nearest whole number.
* With regard to electricity fees for every month until March in 2010, special measures and transitional measures for fuel cost adjustment are to be applied.


[1] Standard Fuel Price

The standard fuel price shall refer to the fuel price used as the basis for electricity rates.

Average Price Derived from the Foreign Trade Statistics for 2012
(from January to March)
Average Crude Oil Price per Kiloliter 57,802 yen
Average LNG Price per Tons 67,548 yen
Average Coal Price per Ton 11,452 yen

(Crude Oil Equivalent
per Kiloliter)
44,200yen
||
Standard Fuel Price



[2] Average Fuel Price

The "average fuel price" shall be calculated based on the following formula and the 3-month (actual recorded) prices derived from Foreign Trade Statistics for crude oil, LNG, and coal.

[Average Fuel Price (crude oil equivalent per kiloliter) = A x α + B x β + C x γ ]
A: Average Crude Oil Price per Kiloliter for Every 3 Months α: 0.1970
B: Average LNG Price per Ton for Every 3 Months β: 0.4435
C: Average Coal Price per Ton for Every 3 Months γ: 0.2512

* The signs "α", "β", and "γ" represent (constant) coefficients for calculating the average fuel price of crude oil equivalent from the average price of crude oil, LNG, and coal, respectively.
Such coefficients are those multiplied by the composition ratio of each fuel and used for converting to crude oil equivalent.


[3] Standard Unit Price

The "standard unit price" defined in our Electricity Supply Provisions, etc. shall be a fuel cost adjusted unit price when an average fuel price has fluctuated by 1,000 yen/kl.

[Case for a Metered System]
(per 1kWh)
Low voltage supply (lighting, low voltage power, etc.) 0.228 yen
High voltage supply (high voltage power, etc.) 0.220 yen
Extra high voltage supply (special high voltage power, etc.) 0.217 yen

Please note that this purports to be an accurate and complete translation of the original Japanese version prepared for the convenience of our English-speaking audience. However, in the case of any discrepancy between the translation and the Japanese original, the latter shall prevail.