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Saturday, April 28, 2012

Metro government, Tepco's top investor, demanding sweeping changes at the utility


Staff writer

The Tokyo Metropolitan Government flexed its muscles Friday as the top shareholder in besieged Tokyo Electric Power Co. by demanding that Tepco carry out extensive reforms, including slashing operating costs and making its management transparent.

Tokyo Vice Gov. Naoki Inose showed reporters a five-point list of demands the metro government plans to submit to Tepco's regular shareholder meeting in June. But whether the demands are adopted remains an open question.

The metro government became the utility's top shareholder at the end of last month after two insurance companies sold their Tepco shares, which nose-dived when the triple-meltdown crisis started at the firm's Fukushima No. 1 nuclear plant in March 2011.

The metro government currently holds a 2.66 percent stake in the utility, which faces massive redress outlays as it struggles to contain and ultimately end the nuclear crisis, and remain solvent in the process.

"Tepco has never put customers first. That's why it still believes it is entitled to raise utility rates whenever it wants. We need to introduce (measures) to change that attitude," Inose said.

The metro government is demanding that Tepco appoint a certified accountant as an outside director to review the firm's pricing system and cozy business relations with its subsidiaries and affiliates — an arrangement that allegedly led to higher electricity rates.

Officials from the metro government, which has long been one of Tepco's largest shareholders, have parachuted into the utility, landing jobs as outside directors since 1951. Inose vowed that the metro government will end this practice.

The metro government wants Tepco to be customer-oriented and focused on generating power, and thus ditch its nonrelated side pursuits, including real estate, sports facilities and insurance — operations mainly handled by affiliates.

The metro government also will demand that Tepco introduce a more open, competitive bidding system for its procurements now that it is set to be propped up by public funds.

Inose said open bids would promote competition among international bidders and push down costs.

Asked if the metro government's demands will be endorsed at the shareholders' meeting, Inose said it may be difficult to persuade other large shareholders, including banks, to go along. But he noted the metro government bears a responsibility to help Tokyo's small and midsize businesses being confronted with higher electricity bills.



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