TEPCO - it didn't work

March 22, 2012

TEPCO changes rate hike plan / Rates for industrial customers can't be raised before contracts expire

The Yomiuri Shimbun

http://www.yomiuri.co.jp/dy/national/T120321005009.htm

Tokyo Electric Power Co. said Wednesday that it will postpone utility rate hikes for some of its industrial customers until after it can obtain their approval on its rate increase plans.

Those subject to the postponement are industrial consumers whose current service contracts are effective until after the planned April 1 implementation date for the new rates.

TEPCO's change of stance came after it judged that it failed to sufficiently explain to industrial customers that rate hikes before the expiration of contracts require approval of the customers.

Earlier in the day, Economy, Trade and Industry Minister Yukio Edano said he had directed the utility to take corrective measures to sufficiently explain its utility rate hike plans.

In a news conference held after a Cabinet meeting, Edano said, "Although utility increases before the expiration of contracts require approval of customers, TEPCO failed to thoroughly explain that point."

TEPCO plans to raise the rates for industrial consumers, such as factories and office buildings, by an average of 17 percent from April 1. The rates for these customers have already been deregulated, so the utility is allowed to charge increased rates through negotiations with individual customers without obtaining the approval of the METI minister.

The utility had sent to its industrial customers a document saying that "new utility rates will be applied from April 1 regardless of the expiration dates for the current contracts."

But as for industrial consumers whose contracts will come up for renewal on or after April 1, rates should be maintained at the current levels until the present contracts expire.

TEPCO stopped short of explaining this point and dealt with individual customers separately when it was asked about it.

"It's jaw-dropping," Edano said. "I want TEPCO to rectify its management culture drastically."

About 240,000 industrial customers are subject to the planned hikes, the utility said.

In connection with the rate hike plan, TEPCO President Toshio Nishizawa once said, "Rate increases are a power company's right." This sparked backlash from local governments and industrial sectors.

Regarding the rate hike for households that requires ministry approval, the utility plans to apply for an increase of about 10 percent effective from July. But it will face severe screening by the ministry.