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Is TEPCO's rate hike acceptable ?

April 28, 2012
Consumer Affairs Agency to examine TEPCO electricity rate hike for households




The Consumer Affairs Agency is set to examine whether a 10 percent electricity charge hike for households planned by Tokyo Electric Power Co. (TEPCO) is appropriate, agency officials said.

The agency is expected to consult with certified public accountants over an application to be filed by TEPCO for the planned rate raise.

Jin Matsubara, state minister for consumer affairs, underscored the importance of considering the issue cautiously.

"The rate hike won't win the public's understanding unless the utility thoroughly rationalizes its operations, including a substantial cut in its personnel expenses. Moreover, we must prevent such a hike from adversely affecting people's livelihoods," he said.

Another agency official said it cannot easily grant TEPCO permission to increase its electricity rates for households.

"We can't give the green light to the application unless the utility meets conditions that will satisfy consumers, such as disclosure of information on why it must raise the charges. We just can't accept TEPCO's claims as they are. We're determined to analyze TEPCO's situation to find bases for determining whether the 10 percent hike is too much," the official said.

The hike is part of a comprehensive special business plan that TEPCO, the operator of the crippled Fukushima No.1 nuclear power station, and the Nuclear Damage Liability Facilitation Fund submitted to Economy, Trade and Industry Minister Yukio Edano on April 27. The plan outlines the financially troubled utility's specific plan to rehabilitate itself.

As a rule, the agency and other government regulators refer applications for hikes in utility fees to a meeting of Cabinet ministers concerned. However, ministers concerned have typically rubber-stamped such applications. The TEPCO application, therefore, will be the first time for the ministers concerned to strictly examine whether the planned rate hike is appropriate.

TEPCO is expected to file an application with the government in May for a 10 percent increase in electricity charges it intends to carry out as early as July, and the Economy, Trade and Industry Ministry will hold a hearing to deliberate the application.

The ministry is expected to consult with the Consumer Affairs Agency over the outcome of the deliberations. The agency together with certified public accountants and other experts will then examine whether the rate bump is appropriate.

If agreement is reached between the agency and the ministry, the two government bodies will jointly refer the application to the ministers concerned. After the ministers discuss the issue, Edano will decide whether to permit the rate increase.

Since its founding in 2009, the Consumer Affairs Agency has never exercised its authority to give advisories to other ministries and agencies, raising questions over its raison d'etre.

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