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Tepco to jump into markets outside Tokyo

JIJI

Tokyo Electric Power Co. plans to start moving into other markets in October as Japan prepares to liberalize its electricity market in 2016, officials of the beleaguered utility said Thursday.

Tepco, the nation’s largest utility, will initially make forays into the western and central areas of Japan traditionally served by regional monopolies Kansai Electric Power Co. and Chubu Electric Power Co., they said.

Competition among power and gas suppliers and commodities traders is expected to heat up after the electricity market is liberalized, industry sources said.

The new business projected from outside Tokyo is part of Tepco’s financial turnaround plan, which was approved in January by the government, which effectively nationalized the utility to deal with the fallout from the Fukushima nuclear crisis.

The forays will be led by Tepco Customer Service Corp., a wholly owned Tepco subsidiary that will register with the government as a new power supplier on Thursday.

Tepco Customer Service will procure electricity generated by other companies and sell it primarily to areas where large firms are concentrated across the nation, the sources said.

After the core meltdowns crippled Tepco’s Fukushima No. 1 power plant March 2011, companies, towns and municipalities have flocked to other power suppliers to secure cheaper and more reliable sources of power.

Kansai Electric and Chubu Electric are already making business forays into Tokyo, and Tokyo Gas Co. and JX Nippon Oil & Energy Corp., a unit of resources giant JX Holdings Inc., are preparing to sell electricity directly to households.

In response, Tepco, which serves mainly the eastern Kanto region, is considering building thermal power plants in other areas in the future.

In the meantime, all 10 of the regional power monopolies plan to temporarily cut rates for households in July to reflect a drop in fuel costs, it was learned Wednesday.

The move comes amid a decline in import prices for crude oil, coal and other materials used as fuel in thermal power generation, which Japan is relying on in the absence of atomic power.

In Tepco’s area, the electricity bill for an average household is expected to be around ¥8,540, about ¥25 cheaper than expected for June, while the rate for Kansai Electric customers is expected to fall by more than ¥30.

Electricity and gas rates in Japan are reviewed every month based on changes in fuel and materials prices.

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