Sunday, August 28, 2011

TEPCO Requests 10% Electiricty Price Rise

Tokyo Electric Power Co. has asked a third-party panel tasked with assessing its financial standing to approve an increase in electric charges of at least 10 percent, but the panel plans to reject the request, it was learned Saturday.
The panel, which the government appointed in June, will instead ask TEPCO to work harder to cut costs.
TEPCO wants to raise electricity fees as it has had difficulty coping with the surge in fuel costs for its thermal power plants, according to sources.
The utility is operating its thermal power plants at full capacity to offset shortfalls in electricity following the outbreak of the nuclear crisis at the crippled Fukushima No. 1 nuclear power plant.
Taking the month of August as an example, TEPCO calculates the rate hike would increase the financial burden of a standard household by 660 yen.
TEPCO expressed its wish to the panel to raise the electricity charges by a fixed amount of 10 percent or more, rather than an amount proportionate to the change in fuel costs every three months, the sources said.
The power company told the panel it planned to raise the electricity charges temporarily until the nuclear reactors that have been suspended for routine checkups at Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture are restarted. Only two of the seven reactors at the power plant are now operating.
Expecting its fuel costs to rise about 700 billion yen over a one-year period, TEPCO is believed to have decided the rate hike is inevitable as the rise in fuel costs will squeeze the company's profit, making it difficult to compensate the victims of the nuclear crisis.
According to a government estimate, TEPCO needs to raise electricity charges by 16 percent to cover the losses caused by the rise in fuel costs. The company refrained from requesting that big a hike, as it plans to fill the gap by trimming labor costs, according to the sources.
According to TEPCO, a standard household normally would be expected to pay about 6,683 yen in electricity charges for the month of August. If TEPCO's plan to raise electricity charges were approved, the figure would rise to 7,350 yen, or more.
However, the third-party panel, which is assessing TEPCO's ability to cut costs and examining the power company's assets to be sold, is believed to have judged that TEPCO can do more to trim its costs.
The panel is also concerned that the electricity charge hike will be prolonged, as it is unclear when the nuclear reactors of the Kashiwazaki-Kariwa nuclear plant will restart.

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