FTC chides Tepco for failing to explain rate hike for corporate users

Kyodo

The Fair Trade Commission on Friday warned Tokyo Electric Power Co. that its failure to fully explain its rate hike plan for corporate users may constitute an abuse of its dominant position and thus violate the Antimonopoly Law.

The trade watchdog issued the warning in a document to Tepco amid outcries over the average 17 percent rate hike it imposed in April for some of its corporate customers that had accepted the plan as well as its goal to raise household rates that is currently under government scrutiny.

The commission said Tepco effectively monopolizes the supply of electricity to corporate clients in its service area, although deregulation since the late 1990s has gradually opened up the market for competition, and it is in a dominant position that leaves its clients no choice but to accept the rate hike.

Tepco failed to explain that corporate users can reject the rate hike if their electricity supply contracts have yet to expire, the FTC said.

The commission also learned Tepco asked its roughly 220,000 clients with contracts for less than 500 kw, mostly small and medium-size companies, to accept the rate hike simply by sending them documents about it.

On April 1, Tepco raised electricity rates for 11,000 of its roughly 237,000 corporate customers in an apparent effort to help finance fossil fuel purchases stemming from its increased reliance on thermal power generation because of the Fukushima No. 1 nuclear plant meltdown crisis.

Tepco also plans to raise its rates by an average 10.28 percent for households, having applied to the government to start the hike in July. Approval, however, is not expected before August.