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Thursday, May 31, 2012
Higher rates for households expected to raise extra ¥190 billion for utility
Panel likely to delay start of 10% price hike by Tepco
Tokyo Electric Power Co.'s hoped-for 10 percent price hike for households will probably not kick in on July 1 because a government panel scrutinizing the plan faces no deadline for reaching a judgement, an official in the Ministry of Economy, Trade and Industry said Wednesday.
"Tepco would have to officially notify the public of the price hike before July 1, which means the panel would have to approve the hike around June 20," said METI official Manabu Nabeshima. "The panel has raised various concerns. They are basically concerned that Tepco could do more to cut costs."
The price hike is part of a 10-year turnaround plan, approved by METI on May 9, for Tepco to achieve a net profit of ¥106.7 billion in fiscal 2013. The utility is projecting it will post a loss this fiscal year of ¥201.4 billion, its third straight year of red ink, to pay compensation related to the nuclear disaster at the Fukushima No. 1 plant and increases in the cost of thermal fuel.
Tepco hoped the July 1 price hike would up revenue by ¥190 billion this fiscal year. This translates into a ¥480 hike in an average household's monthly bill.
With every nuclear reactor in the country currently offline, utilities have been forced to increase their use of thermal fuel.
The 10-year plan includes restarting reactors at Tepco's massive Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture and a planned capital injection of ¥1 trillion in taxpayer money.
The panel, consisting of a university professor, an accountant, a consultancy executive and others, has met about once a week since May 15 and will probably continue to meet with similar frequency, METI's Nabeshima said.
METI will also hold public hearings on the rate hike June 7 and 9 so residents can express their opinion, and the panel will watch how that goes, he added.
One of the complaints by the panel is that Tepco's projected profit margin may be too big, Nabeshima said. Tepco's pricing scheme is to add a targeted profit margin to its costs and then charge households a rate based on meeting that target.
It was revealed recently that 90 percent of Tepco's profit comes from households, even though that sector accounts for less than a half of its sales volume.