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TEPCO's unreasonable request to Gov't

January 26, 2013


Tokyo Gov. Inose balks at TEPCO demand for hefty cancellation charge



TOKYO (Kyodo) -- Tokyo Gov. Naoki Inose balked Friday at Tokyo Electric Power Co.'s demand that the local government pay a hefty charge to cancel its contract to sell the utility electricity generated by government-owned facilities.

Inose indicated that the metropolitan government, which intends to select a buyer through competitive bidding, is not planning to pay a sum of around 5.18 billion yen requested by TEPCO.

The company is seeking the amount to cover the costs it will incur in switching to a different supplier as well as for having to dip into reserves set aside from electricity sales for renovating power-generating facilities, according to the government.

A TEPCO official said of the cancellation charge, "It's necessary for the metropolitan government to shoulder it in order not to impact our users."

At a news conference, Inose likened TEPCO's action to "a bar ripping off a customer" and said it was "not reasonable."

In October, the metropolitan government revised an ordinance to enable it to sell power generated by its hydro power stations to power suppliers other than TEPCO. Before the revision, the government notified TEPCO about its intention to cancel the contract -- valid until 2019 -- at the end of this March.

The government is planning to start preparing for a competitive bid to search for a new buyer by the end of this month. "We can hold a bid without TEPCO's consent," a government official said. "We would like to conduct negotiations concurrently for the cancellation."

The metropolitan government has three hydro power stations and generated around 1 billion yen in revenue for power sales to TEPCO in fiscal 2011.

Before the ordinance change, TEPCO was the only entity to which the government could sell power.

A total of 26 local governments including Tokyo operated power generation facilities at 296 locations and produced a maximum 2,460 megawatt of power as of April 2010, according to the Public Electric Utility Enterpriser's Forum.

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