Tepco to delay rate hike by a year for some customers

Kyodo

Tokyo Electric Power Co. will delay its planned electricity rate hike by one year for some corporate customers that are opposed to the increase, after coming under fire for its insufficient explanation on the matter.

The delay may result in Tepco bringing in only an extra ¥300 billion in the next business year, compared with its initial estimate of ¥400 billion, Managing Director Hiroaki Takatsu said Tuesday.

Tepco is planning to raise its rate in April by an average of 17 percent for large-lot customers.

While the utility, reeling from the crisis at the Fukushima No. 1 nuclear power plant, struggles to improve its difficult business conditions, Minister of Economy, Trade and Industry Yukio Edano urged Tepco and the government-backed bailout fund Tuesday to swiftly submit a comprehensive restructuring plan.

A delay in the report, which is scheduled to be submitted by Sunday, would not be “desirable,” Edano said.

It is not certain that Tepco and the Nuclear Damage Liability Facilitation Fund will finish the work in the next few days, with the major sticking point believed to over who should take over from outgoing Chairman Tsunehisa Katsumata.

The government hopes his replacement will play a key role in reforming the troubled utility.

Edano also said earlier that Tepco’s behavior on the rate hike issue made him realize the need to drastically change the company’s management makeup.

Tepco said Jan. 17 it would raise electricity charges for corporate customers in April to help finance fossil fuel costs stemming from boosting thermal power generation in the wake of the nuclear disaster. It also asked these customers to specify whether they would accept the rate hike by Friday.

But the utility has come under fire for failing to generally explain that corporate customers could refuse to accept the rate hike if their current contracts with Tepco are still valid. The utility made the explanation only when customers made inquiries.

Admitting that it hasn’t given a sufficient explanation on the matter, Tepco announced Tuesday that it will postpone the rate hike for customers with contracts expiring between Jan. 17 and Friday if they do not accept the rate hike.

The utility will also reaffirm the present intentions of customers that have already accepted the rate increase.

Customers with contracts set to expire Saturday will be subject to the rate hike from the following day as requested. Those with contracts set to expire Sunday or later can maintain the current rate until their expiration unless they accept the April rate hike.

Tepco said it has gained approval on the rate hike from about 13 percent of customers that will be affected by the hike.

The utility also said Tuesday it has received an additional ¥104.9 billion as part of ¥1.58 trillion in financial aid the government has decided to provide from the fund over compensation payments related to last year’s accident at the Fukushima plant.

The assistance is provided under a scheme that prevents Tepco from falling into negative net worth amid colossal payments to compensate people and companies affected by the disaster. The utility received ¥558.7 billion in November.