25 Juillet 2012
TOKYO (Kyodo) -- The government approved Wednesday a request from Tokyo Electric Power Co. to raise household electricity rates by an average 8.46 percent from Sept. 1 to help the utility overcome its financial plight following last year's nuclear disaster at its Fukushima Daiichi power plant.
The permission will pave the way for the country's largest utility known as TEPCO to receive a public fund injection of 1 trillion yen Tuesday, meaning it will effectively be placed under state control.
Stressing that the government strictly checked the appropriateness of the costs to be passed on to consumers, energy agency chief Ichiro Takahara urged TEPCO President Naomi Hirose to continue to fulfill its key tasks such as paying massive disaster-related compensation and providing stable electricity supply to its service area including Tokyo.
It is the first time in 32 years that TEPCO has resorted to such a rate hike that requires government permission.
In May, TEPCO applied to the government to raise household electricity rates by an average 10.28 percent from July 1, citing increasing fuel costs for thermal power generation to make up for the suspension of nuclear power generation following the Fukushima crisis triggered by the March 2011 earthquake and tsunami.
But it was forced to trim its request to 8.46 percent as the government called on the utility to revise the hike to about 8.47 percent such as by slashing personnel and other costs the company had planned to pass on to consumers.
Hirose told Takahara, director general of the Natural Resources and Energy Agency, he hopes to take the initiative to encourage company employees to maintain their motivation to stably supply power despite cut in labor costs.
As the government screening process on the utility's rate hike plan has been prolonged, TEPCO said earlier in the day it now plans to receive the capital injection next Tuesday, postponing the payment schedule by about a week.
While winning government approval for the rate hike is an apparent relief to the cash-strapped company, Hirose expressed concern last week over how its business may be adversely affected by not being allowed to raise charges as initially sought.
Under its 10-year comprehensive restructuring plan, the utility is forecast to start logging a net profit in the business year ending in March 2014.
The plan, however, largely relies on whether TEPCO can increase revenues by raising electricity prices and restart its idled nuclear reactors in Niigata Prefecture from next April, an apparently daunting task amid heightened public concerns over the safety of nuclear power.
After the utility receives the 1 trillion yen of taxpayers' money on Tuesday, financial institutions are expected to provide 370 billion yen in additional loans the following day.