Japan electricity prices in the wholesale markets exploded in the week ending January 8, reaching a historic high. Short supply and buyer's panic fired a rocket engine of the markets.

Based on the Rim Power Index (Day ahead 24 hours), weekday power prices in the east market, including Hokkaido, Tohoku and Tokyo area, averaged out at 77.27 yen per kilowatt hour (kWh), up 62.51 yen/kWh or 423.5 % from the week ended December 25, which is the eve of Japan's year end and new-year holidays, meanwhile prices in the west, made up of the Chubu, Hokuriku, Kansai, Chugoku, Shikoku and Kyushu area, at 71.74 yen/kWh, up 54.91 yen/kWh or 326.3%. The east average exceeded the west, a once-normal-but-currently-rare price formation, with a gap of 5.53 yen/kWh, compared to the minus 2.07 yen/kWh observed in the week before the winter holiday period.

An ignition point for the price bulge was believed to be the liquefied natural gas (LNG) market, where prices spiked in these days partially because of troubles in LNG plants in U.S., Australia and so on. Japan's major electricity producers, which seem to underestimate demand, faced a fuel shortage amid a cold wave. Therefore, the markets were mired in a kind of feedback loop: Increasing prices leads to buyer's concern, resulting in higher prices, which foments buyers' fear more strongly, then prices .... Chances are high that many buyers suffer heavy accounting damage from the big jump. On the Japan Electric Power Exchange (JEPX), east market hit an all-time high of 120.02 yen/kWh for 16:00 to 19:00 units (one unit = 30 minutes) to delivery on Jan 8, west also reached an areas' high of 120.00 yen/kWh for 16:30 to 19:00 units for the same delivery .

The premium of Hokkaido to Tokyo narrowed minus 0.09 yen/kWh from minus 1.95 yen/kWh seen in in the week before the winter break, with Hokkaido's 24 hours average of 77.21 yen/kWh (previous week's ave:13.39 yen) and Tokyo's 77.30 yen/kWh (15.34 yen), which are reckoned in conformity to data compiled by the JEPX. Hokkaido prices often drift at higher levels than other areas mainly in the winter season. Tohoku's 24 hours average recorded 77.21 yen/kWh, 0.09 yen/kWh lower than Tokyo.

Kansai's weekly average vaulted to 71.75 yen/kWh from 17.44 yen/kWh, and Kyushu's surged to 71.72 yen/kWh from 55.41 yen/kWh. The difference of the two areas shrank to 0.03 yen/kWh from 1.13 yen/kWh. Kansai area is the biggest market in the western Japan, and Kyushu's prices are apt to move at less expensive levels alongside of other areas.

On the JEPX, the weekday average of System Price (Day ahead 24 hours), which were figured based on the data of 9 areas, skyrocketed by 61.70 yen/kWh or 431.2% to 76.01 yen/kWh, with the average volume shrinking by 152,140 megawatts per hour (MWh) or 14.7% to 879, 907 MWh.

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