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UPDATE 1-Electricity prices jump as winter chill hits Japan

(Adds LNG shipment delay, other details)

TOKYO, Dec 17 (Reuters) - Power prices in Japan surged on Thursday to the highest in more than two years as a cold snap gripped the country, fueling demand for heating amid reduced generation capacity with nuclear plants offline and higher liquefied natural gas (LNG) costs.

Electricity prices reached 60.5 yen (59 cents) per kilowatt hour on the Japan Electric Power Exchange, the highest since late July 2018, according to exchange data.

The rise underlines the potential for tightness in Japan’s power market as the country’s moribund nuclear sector struggles to return to its former position nearly 10 years after the Fukushima crisis.

“Nuclear performance in Japan has been very poor ... putting enormous pressure on gas-generation during peak winter demand,” said Wood Mackenzie research director Robert Sims said.

LNG prices have also been surging from record lows earlier this year, pushing input costs higher for power generators.

Kansai Electric Power, which supplies power to the Osaka region of Japan, was forced to reduce output at one of its LNG plants due to a delay in a shipment of fuel, a spokesman said by phone. The company received power supplies from other utilities on Tuesday and Wednesday, a spokeswoman at its transmission unit said.

Chubu Electric Power also received power from other utilities to meet the rise in demand and because of a broken transmission tower, a spokeswoman said.

Japan is being hit by plummeting temperatures and heavy snowfall in parts of the country, isolating communities, cutting off power and prompting the government to call an emergency meeting to address the situation.

The country, which once relied on nuclear generation for about a third of power supplies, has three reactors operating out of 54 operable units before the March 2011 Fukushima disaster.

Nearly 40% of those are being decommissioned and the remainder are being relicensed under new safety regulations introduced since 2011 or idled by court orders, maintenance and to complete new upgrades.

($1 = 103.2200 yen)

Reporting by Aaron Sheldrick and Jessica Jaganathan; Editing by Mark Potter

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