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Friday, July 29, 2011

Tepco's cost structure drawing scrutiny by monitoring panel

Staff writer

A government panel said Thursday it will thoroughly check Tokyo Electric Power Co.'s cost structure and how it has been reflected in electricity bills to see if its rates are appropriate.

"Although the time is very limited, we will take out all the things from the basket and review them to check if any wasteful costs are reflected to the current power charge system," said Kazuhiko Shimokobe, a lawyer heading the panel monitoring Tepco's operations and evaluating its assets.

Under the current system, power firms can set rates that secure profits, making sure they charge more than their power generation and distribution costs.

The panel has asked three private firms in a ¥440 million contract to scrutinize Tepco's business operations.

Those firms will finish their work by mid-September, and the panel will submit a report on Tepco's operations, validity of its billing structure and long-term structure.

Shimokobe also said that while the separation of Tepco's power generation and distribution businesses is not a focus of the panel's discussions at this point, it will examine Tepco's cost structure by looking at the two areas separately.

"The figures that Tepco have disclosed have always been based on the assumption that power generation and distribution are handled together. But that won't work this time," Shimokobe said.

He added that whether to separate the two matters should be discussed based on the figures that Tepco provides.

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The Japan Times

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