Photo/Illutration Prime Minister Fumio Kishida, second from right, receives the Liberal Democratic Party’s economic package proposal on Oct. 18. (Koichi Ueda)

With electricity prices soaring due to the Ukrainian crisis and the weak yen, the central government on Oct. 26 drafted a relief measure to reduce consumer’s electricity bills by about 20 percent.

The government also introduced measures to help lower the costs of city gas and propane gas, and extend existing subsidies for gasoline and heating oil to keep those prices down. 

Under the proposal to subsidize electricity rates, a typical household will see a monthly electricity bill that is about 2,000 yen ($14) lower.

After reaching an agreement with the ruling coalition, the measure will be included in an economic package that the central government will draft on Oct. 28.

The measure will kick in as early as possible but after January 2023, the government said.

The reduction will be made possible by the government providing subsidies to utility companies.

The price of electricity for household use will be subsidized 7 yen per kilowatt-hour.

For a household that uses 300 kilowatt-hours of electricity a month, the monthly bill will be 2,100 yen lower.

The price of electricity for business customers will be subsidized 3.5 yen per kilowatt-hour.

The amount of reduction in prices because of the government’s subsidies will be detailed in a bill, the government said. The subsidy amount will be reduced in September 2023.

Electricity prices have increased about 20 to 30 percent from the previous year due to the ongoing war in Ukraine and the weakened yen.

The government said consumers should expect even more rate hikes, with an additional 20 to 30 percent increase after next spring. 

Prime Minister Fumio Kishida has said he will present an unprecedented measure to curb prices.

Like gasoline subsidies, the electricity subsidies are expected to be massive and reach the trillion-yen level.

SUBSIDIES FOR CITY GAS AND PROPANE

The government also drafted a plan to reduce the price of city gas by about 10 percent.

The government’s subsidy for city gas will be 30 yen per cubic meter.

A typical household that uses 30 cubic meters of city gas a month will see a reduction in its monthly city gas bill of 900 yen.

Companies that use comparatively small amounts of gas will receive the benefit, too, the government said.

For propane gas, the government decided not to provide subsidies because there are about 17,000 retail sellers.

Instead, the government said it will implement a measure to help streamline the shipping system so that it will lead to curbing propane gas prices.

The cost will be included in a supplementary budget that is expected to be submitted to an extraordinary Diet session.

EXTENDED GAS AND HEATING OIL SUBSIDIES

Regarding subsidies for gasoline and heating oil, the government said the current deadline at the end of December will be extended, and a measure to ease a sharp increase in prices will also be implemented around the first half of the next fiscal year.

The subsidies started in January this year and were initially expected to end in March. 

But the government has extended the deadline and repeatedly expanded the subsidies. They will be gradually reduced after June 2023. 

The budget amount for the subsidies has already ballooned to about 3.2 trillion yen.

(This article was written by Shiki Iwasawa and Junichiro Nagasaki.)

Related News