Tokyo Electric Power Co. said Jan. 17 that it will seek an average 17 percent hike in electricity rates from April for some 240,000 enterprises having contracts for 50 kW or more. It hopes to raise some ¥400 billion annually through the hike and to use the revenue to finance part of the fuel costs of increased thermal power generation necessitated by the Fukushima nuclear crisis.

The rise of power costs will affect not only major manufacturers and non-manufacturers, including department stores, but also medium and small factories, supermarkets and hospitals.

In fiscal 2010, 22 percent of corporate electricity users were machinery makers, 12 percent chemical makers and 9 percent steel makers. The move to raise power costs could lead to accelerate the hollowing out of Japanese industries.

Medium and small enterprises may have a particularly hard time because it will likely be difficult for them to pass the increased electricity costs on to their products or services.

Tepco should be aware of its responsibility not only for the Fukushima nuclear fiasco, which has made large areas uninhabitable due to radioactive contamination and caused worries among people about food safety, but also for the negative effects on the economy its power rate raise will cause.

Tepco decided on the margin of the power rate hike on the assumption that its Kashiwazaki Kariwa nuclear power plant in Niigata Prefecture will be out of operation throughout fiscal 2012. It did not include the cost to decommission the Nos. 1 to 4 reactors at the stricken Fukushima No. 1 nuclear power plant.

Banks are pressuring Tepco to restart the Kashiwazaki Kariwa plant and to raise power rates as the conditions for new loans. Tepco plans to have the government allow it to raise power rates for households in the near future.

Unless Tepco presents a convincing plan to economize, people will not accept rate hikes. The Kashiwazaki Kariwa plant should not be restarted unless the government presents a clear long-term policy of phasing out nuclear power. Tepco’s decision this time will lead more enterprises to generate power themselves and do more power saving.

The government, for its part, should seriously consider separating power distribution business from power companies to encourage new firms to enter power generating business.

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