Tokyo Gov. Naoki Inose has balked at Tokyo Electric Power Co.'s demand that the metropolitan government pay ¥5.18 billion to cancel its contract to sell the utility electricity from its hydropower plants.
Inose hinted that the Tokyo Metropolitan Government, which intends to select a buyer via competitive bidding, doesn't intend to pay the sum.
The utility claims the cancelation charge is fair because it will have to cover the costs incurred by switching to a different energy supplier and dip into reserves set aside from electricity sales to renovate power-generating facilities, the metro government said.
"It's necessary for the metropolitan government to shoulder (the costs) in order not to impact our users," a Tepco official said.
At a news conference, however, Inose likened Tepco to "a bar ripping off a customer" and said the sum is "unreasonable."
Last October, the metropolitan government revised an ordinance to enable it to sell power from its hydroelectric stations to suppliers other than Tepco. It notified the utility about its intention to cancel the contract — valid until 2019 — in March.
The metro government is planning to solicit bids from prospective buyers by month's end.
"We can hold a bidding process without Tepco's consent. We would like to conduct negotiations concurrently on the cancelation," one of its officials said.
In fiscal 2011, Tokyo's three hydroelectric power plants generated around ¥1 billion in revenue from sales to Tepco.
Before the revision, Tepco was the only entity to which the metro government was allowed to sell power to.
A total of 26 local governments were running power facilities at 296 locations nationwide as of April 2010.