Tepco suffers record ¥1.24 trillion group loss as president takes the fall

by Kazuaki Nagata

Staff Writer

With the nuclear crisis pressing hard on management, Tokyo Electric Power Co. on Friday reported a record group net loss of ¥1.24 trillion for fiscal 2010.

Tepco didn’t include what are expected to be massive compensation payments to people and companies harmed by the accident at the Fukushima No. 1 nuclear power plant.

President Masataka Shimizu announced he will resign after the blue chip utility’s June 28 shareholders’ meeting to take responsibility for the disaster triggered by the March 11 earthquake and tsunami.

Toshio Nishizawa, 60, a veteran from Tepco’s planning division, will assume the presidency.

“Because of the Fukushima accident this time, we have damaged the trust of nuclear power plant safety and have caused great concerns to people in society. I’d like to take responsibility,” Shimizu said at the firm’s headquarters.

Nishizawa said the company is facing “its biggest crisis since its foundation” and has to focus on tackling four issues: getting the Fukushima reactors under control, supporting the victims, providing stable electricity supply, and reforming the firm.

The utility also officially decided to decommission reactors 1 to 4 at the Fukushima No. 1 plant and called off plans to build two new ones there, No. 7 and No. 8.

While the beleaguered utility increased sales by 7 percent to ¥5.36 trillion and operating profit by 40.5 percent to ¥399.6 billion, it also posted a net loss of ¥1.24 trillion, reversing the ¥133.7 billion profit earned the previous year.

Extraordinary losses included ¥426.2 billion to stabilize the Fukushima reactors, ¥207 billion to eventually decommission them, and ¥211.8 billion to secure reactors 5 and 6 as well as the Fukushima No. 2 plant.

Tepco also disclosed plans to streamline management and to issue 20 percent pay cuts to regular employees and 40 to 60 percent pay cuts to executives. It also will sell off ¥600 billion in assets.

Along with Shimizu, Vice President Sakae Muto, who has been in charge of the nuclear plant business, will also step down.

Chairman Tsunehisa Katsumata will continue to oversee the crisis.