Tepco wants six-year 10% hike, then 5% cut

Kyodo

Tokyo Electric Power Co. and the fund helping it with nuclear disaster compensation might hike power rates once for six years before cutting them 5 percent in fiscal 2018, sources said Friday.

The utility’s plan, which entails further restructuring based on additional loans from creditor banks, is designed to persuade creditors to give it more loans. But its feasibility is unclear because it depends on restarting now-idled nuclear plants and other unforeseeable factors.

The utility, which runs the crippled Fukushima No. 1 power plant, briefed creditors on the plan with the state-backed Nuclear Damage Liability Facilitation Fund. Tepco’s earnings in the plan were projected over the next decade in a bid to win ¥1 trillion in additional loans.

Tepco and the fund are hoping to clinch an agreement on the loans by Wednesday, the sources said.

Under the plan, Tepco would first raise electricity rates by roughly 17 percent for corporate clients in April and by 10 percent for households as early as July, three months earlier than planned.

The utility would then use the additional loans to carry out restructuring and improve its balance sheets, while attempting to win public approval to restart the seven-reactor Kashiwazaki-Kariwa power plant in Niigata Prefecture in April 2013.

The higher rates would last no longer than about three years, and the rates might be lowered to their prehike levels in April 2015.

The utility would then compensate customers with more cuts in electricity rates once restructuring has been completed.

But the creditors pointed out uncertainties in the plan, such as the need for the utility to win the consent of trade minister Yukio Edano for household rate hikes and the consent of local governments to restart the nuclear plant amid widespread radiation concerns generated by the Fukushima disaster, the sources said.

The creditors are making adjustments to support the utility. They are considering accepting its corporate bonds for the time being with plans to switch to regular loans after the proposed rate hikes and the restart of the idled nuclear plant become foreseeable, the sources said.