Hiroshima (Platts)--8Apr2011/750 am EDT/1150 GMT

The Japanese government on Friday told businesses and domestic users to cut power usage by as much as 25% from July, ignoring industry suggestions of alternative ways of coping with the national energy crisis.

The Japan Automotive Manufacturers Association had called for a "rotational output suspension", with different industries stopping production on different days of the week, while the Japan Aluminum Association proposed a cap on power usage by companies.

The government's plan announced Friday said companies in the service area of Tokyo Electric Power Company, or Tepco, and Tohoku Electric Power Company will be asked to cut power usage by 20-25% from July to September, when power consumption peaks on air conditioning demand.

Large consumers, whose power usage exceeds 500 kWh, will have to cut power demand by 25% from 10:00-21:00 (0100-1200 GMT) on weekdays, with users of less than 500 kWh down 20%, and homes 15-20%, the government said.

One source in the automotive industry said the plan seemed to have been drawn up with little consultation with the affected industries.

"The automakers were not asked...and the government statement is not clear whether it seeks to control power usage on the basis of one site, or on a company who could be operating several plants," said one source familiar with the auto industry's discussions with the government.

It was not immediately clear how the plan would be enforced.

A steel mill source said the electric arc furnaces making steel were operating at off peak hours during the night, and asked if they would still be required to cut power usage.

The measure will be implemented under article 27 of Japan's utility act that allows the Minister of Economy, Trade & Industry to control power availability to users in times of power shortage.

The power cut scheme will affect businesses and homes in Tepco's service areas -- Ibaraki, Tochigi, Gunma, Saitama, Chiba, Kanagawa, Yamanashi and Shizuoka prefectures, and Tokyo -- and those of Tohoku Electric -- Akita, Miyagi, Iwate, Aomori, Yamagata, Fukushima and Niigata prefectures.

Government data showed that Tepco supplied 6.5 TWh of power to industries in February: 1.4 TWh to the machinery manufacturing sector which includes automotives, 631 GWh to the steel sector and 344 GWh to the nonferrous metal sector.

The year-on-year usage growth in February was the highest for the steel sector at 17.8%, while the industrial average was 3.3%.

"We will be studying the possible impacts of the government call, to seek an industry-wide solution possibly [in addition to power saving efforts to be made by individual mills]," said a spokesman for the Japan Iron & Steel Federation.

Among the nonferrous metal plants in Tepco's service areas, the stringent 25% cut will be applied to Fukaya aluminum rolling mill operated by Furukawa Sky, the Moka aluminum rolling mill by Kobe Steel, and the 3,000 mt/year ferromolybdenum plant of Taenaka Kogyo.

Secondary aluminum smelters use fuel oil as well as electricity, and they may not be as severely hit as the large rolling mils, said one smelter source.

--Mayumi Watanabe, mayumi_watanabe@platts.com

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