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Japan Excellent Investment Corporation Addresses Energy Costs with New Service

In a significant move towards enhancing operational efficiency, Japan Electric Power Procurement Solutions, headquartered in the Minato Ward of Tokyo, has begun offering an innovative service named "Electricity Rate Budget Support Service" to Japan Excellent Investment Corporation. This newly introduced service aims to tackle the challenges particularly faced by Real Estate Investment Trusts (REITs) regarding the unpredictable nature of electricity costs, enabling more reliable and data-driven budgeting approaches.

Understanding the Challenge

Electricity costs constitute a vital portion of operational expenses for REITs, often accounting for around 10-15% of total fixed costs. The complexity of determining these costs stems from various external factors, such as fluctuations in fuel price adjustments, amendments in renewable energy surcharges, and changes in power supply providers. As a result, the budgeting process, performed biannually, often becomes a burdensome task for organizations, straining resources and leading to budget inaccuracies.

Recognizing this challenge, Japan Electric Power Procurement Solutions has developed a service designed not only to visualize the factors influencing electricity price volatility but also to support improved budgeting accuracy and bolster accountability in reporting.

The Proposed Solution

With the Electricity Rate Budget Support Service, multiple property electricity contracts held by REITs are thoroughly analyzed by region and power supplier. This analysis generates quantitative forecasts for the next 12 months of electricity expenses based on specific parameters like regional fuel cost adjustment rates and contract conditions.

Key components of the service include:

• - Detailed analysis of fuel cost adjustment formulae for each property.
• - Predictive analysis of fuel cost adjustments segmented by region and supplier for the upcoming 12 months.
• - Forecasting the next fiscal year's renewable energy surcharge.
• - Calculating both basic and variable electricity rates.
• - Delivering market trend reports to anticipate future developments.

For properties where electricity rates are relatively high, suggestions for switching to optimal electricity suppliers will be provided, contributing to cost optimization efforts.

Anticipated Benefits

The implementation of this service is expected to lead to:

• - Enhanced accuracy in electricity cost budgeting.
• - Clearer explanations for both internal and external stakeholders.
• - Increased visibility into electricity cost structures, thus facilitating cost optimization.

Ultimately, these improvements aim to minimize the variability risks associated with fixed costs in REIT management, contributing to operational stability.

Executive Insights

Yuto Takahashi, President of Japan Electric Power Procurement Solutions, commented, "Electricity costs can be viewed as a 'variable fixed cost.' They are subject to market fluctuations and policy changes, especially in sectors like REITs, where transparency and accountability are paramount. It is crucial to base budget preparations on solid foundations. Through our support, we aim to lessen the burden on operational teams and enhance the accuracy of electricity cost forecasts."

Future Prospects

As electricity pricing complexity increases, Japan Electric Power Procurement Solutions is committed to expanding its support services specifically targeted at the real estate sector, primarily focusing on J-REITs. This expansion underlines the company’s dedication to addressing the evolving needs of its clients in navigating the intricacies of energy costs.

Company Overview

• - Name: Japan Electric Power Procurement Solutions Inc.
• - CEO: Yuto Takahashi
• - Location: 2nd Floor, 3-9-10 Shinbashi, Minato-ku, Tokyo
• - Capital: 9,000,000 JPY
• - Business Scope: Energy procurement consulting, support for renewable energy procurement, electricity budget creation assistance, fuel cost adjustment forecasting, and electricity supplier transition support.
• - Website: Japan Electric Power Procurement Solutions