Tepco submitted an application Friday to the industry ministry to hike household electricity rates by an average of 10.28 percent from July in its Kanto service area, the first such move in 32 years.
Tokyo Electric Power Co’s proposal would increase an average households’ monthly power bill by about ¥480, according to projections the utility handed to the ministry.
Raising household rates requires prior approval from the industry minister, and a panel of experts will now be set up under the ministry to scrutinize Tepco’s request and cost projections, and ultimately determine whether the proposed increase is justifed.
The utility is projecting that from the current fiscal year through 2014, its annual operating costs will come to ¥5.72 trillion, while revenue will total around ¥5.04 trillion if the current household rates are maintained, meaning it will bleed around ¥680 billion every year.
“We will examine the application without any preconceptions,” industry minister Yukio Edano said shortly after receiving Tepco’s application Friday afternoon.
However, the ministry warned Tepco that the panel’s examination may not be finished by July 1, which would delay the proposed hike.
Under the Electricity Business Law, a public hearing must be held before any decision is made on hiking power rates so citizens can express their opinions. The ministry intends to hold such hearings June 7 and 9.
The Electricity Business Law, which obliges the 10 regional utilities to set rates that ensure their revenues always exceed operating costs, states that the price of electricity should be calculated with “appropriate costs and appropriate profits.”
The law also obliges utilities to meet the entire energy demand in their service areas.
Tepco, whose finances were crippled by the disaster at its Fukushima No. 1 nuclear plant, has also been struggling to pay surging fuel costs for thermal power generation while the nation’s atomic reactors remain idled.
The enforced shift to thermal power sent the utility’s fuel costs soaring by an additional ¥470 billion from March to December, compared to the same period last year. To ease the pain slightly, Tepco said it plans to save ¥278.5 billion this year through cost-cutting efforts.
Onishi tapped for Tepco
The government and Tokyo Electric Power Co. plan to appoint lawyer Shoichiro Onishi, a former executive at the now-defunct Industrial Revitalization Corp. of Japan, as an outside board member, sources said.
Onishi, 48, worked with Kazuhiko Shimokobe, who went on to become Tepco’s chairman, at the state-backed IRCJ, and helped rehabilitate Kanebo Ltd. among other companies.
Last year, Onishi and Shimokobe participated in a government panel set up to probe Tepco’s management and finances. Onishi helped pave the way for the utility’s rehabilitation.