Business / Corporate

Tepco may halve domestic branches in bid to streamline business operations

Kyodo

Tepco, struggling to recover from the 2011 Fukushima nuclear crisis, may shutter half of its 45 domestic branches to streamline business operations, sources said Monday.

Through the consolidation of its power transmission and distribution operations in nine prefectures in eastern and central Japan, Tokyo Electric Power Company Holdings Inc. is eyeing relocating some staff to new fields to improve profitability.

The new areas include technology development and new strategy planning, the sources said.

The company is not planning to cut its workforce, with the remaining branches taking over the operations of realigned units. Tepco is likely to start gradually consolidating its operations in fiscal 2018.

With the growing use of smart meters, which automatically report monthly electricity usage and eliminate the need to check every home, and drones that can be used to inspect power cables, Tepco expects to promote labor-saving measures and boost efficiency.

The firm aims to realign and integrate its nuclear, power transmission and distribution businesses with other utilities. Last month Tepco said it was in talks with its peers, but nothing concrete has been announced.

The company hopes to quickly improve profitability through the streamlining as it faces increased competition in the power sector following full liberalization of the electricity retail market.

In its business turnaround plan announced this year, the company said it will “streamline its administrative work through the merger of its branches,” aiming to cut costs by some ¥50 billion in fiscal 2018 compared with fiscal 2016 by enhancing its power transmission and distribution operations.

Tepco’s financial well-being was devastated by the nuclear disaster, in which the Great East Japan Earthquake and tsunami of March 11, 2011, crippled the Fukushima No. 1 power station, leading three of the six reactors there to suffer meltdowns.