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TEPCO not quite ready to get rid of State

March 23, 2017

TEPCO to delay seeking end to state control by 2 years to FY 2019



TOKYO (Kyodo) -- Tokyo Electric Power Company Holdings Inc. will delay a decision on whether to seek an end to its state control by about two years to fiscal 2019 amid ballooning costs stemming from the 2011 Fukushima nuclear disaster, an outline of its new business plan showed Wednesday.

The move is another sign the utility is struggling to revive its business even after receiving a capital injection of 1 trillion yen ($9 billion) from the government in 2012 to bolster its financial standing. But disaster cleanup costs have continued to rise, with the latest estimate reaching 22 trillion yen.

Under its latest business turnaround plan, which will be the third major revision since the first one was formulated in 2011, TEPCO aims to realign or integrate its nuclear and power transmission and distribution businesses with other utilities to improve its profitability. But it is uncertain whether business will get back on track as planned, with other utilities cautious about such tie-ups.

The company said it will establish a consortium with other utilities to quickly facilitate its reorganization and integration plan.

TEPCO and a state-linked entity offering financial support over massive compensation payments are expected to work out the details of the business turnaround plan and submit it to the government in April for approval.

The government had initially planned to release TEPCO from effective state control in April 2017 or later by reducing the ratio of voting shares currently owned by the entity to less than 50 percent from the current more than 50 percent.

But in the outline of the latest plan, TEPCO said the decision on the issue will be delayed from the end of fiscal 2016, which is this month, to fiscal 2019.

Under the plan, TEPCO is aiming to boost management efficiency and increase productivity.

The revised plan stresses the importance of reaching a basic agreement with Chubu Electric Power Co. to fully integrate their non-nuclear thermal power generation operations by this spring.

TEPCO is also planning to hold discussions with other utilities in the near future to promote the reorganization and integration of power transmission and distribution in the industry. The utility is considering acquiring related overseas operators over the medium- to long-term as part of the strategy.

The company also envisions reorganizing and integrating its nuclear operations in the future. It hopes to establish a consortium with domestic nuclear operators to secure talent and technologies, and develop new light-water reactors. The utility is also aiming to expand into overseas nuclear power generation markets, according to the plan.

The company will also seek cooperation from other power companies in reactivating its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture despite a public loss of confidence.

The prospect of the reactivation of the seven-reactor plant remains unclear with Niigata Gov. Ryuichi Yoneyama having taken a cautious stance toward its restart. The latest plan does not set out a specific timeline.

As compensation payments and decommissioning costs mount, TEPCO is expected to remain under effective state control. But TEPCO's status has prompted concerns among other major utilities that even if they cooperate, profits generated through such arrangements could be used to pay for decommissioning and damages.

To ease such concerns, rules for government involvement and where the cost burden will fall will be mapped out, the plan said.



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