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Toward a "new" TEPCO?

May 10, 2012

'New' TEPCO faces rocky road / Restoring public image, reducing power costs among top priorities

With the new management lineup set for Tokyo Electric Power Co., incoming President Naomi Hirose will face the challenge of reforming the company's tarnished reputation while maintaining a stable electricity supply to consumers.

The new president already has a bulging in-box, including the difficult tasks of resuming operations at plants idled for routine maintenance and decommissioning damaged reactors.

The latest appointments were carried out at the initiative of the government's Nuclear Damage Liability Facilitation Fund, which backs TEPCO's compensation payments over damages due to the crisis at the utility's Fukushima No. 1 nuclear power plant.

The selection of Hirose, who was in charge of TEPCO's compensation negotiation headquarters for people affected by the crisis, was apparently aimed at creating the image of a "new TEPCO."

Kazuhiko Shimokobe, a lawyer who heads the nuclear damage fund's management committee, will replace Tsunehisa Katsumata as chairman.


TEPCO to reflect govt's will

Asked how he will steer the virtually nationalized company, Hirose, who is currently managing director, said at a press conference Tuesday, "This will be my first experience [as president], so I don't have any outlook."

The comment reflects the fact that the firm will follow the government's will and instructions in shaping its business operations.

Katsumata initially demanded that President Toshio Nishizawa keeps his post. However, past comments made by Nishizawa, such as "Rate increases are a power company's right," sparked a backlash, which led the government to flatly refuse Katsumata's request.

With the injection of public funds, the government will gain a majority equity stake in the power company on a voting rights basis. On the government's side, incoming Chairman Shimokobe led the selection process for the latest appointments of the new management executives.

Meetings between the government and all of TEPCO's corporate officers, including Hirose, continued into Golden Week in late April and early May. At the meetings, Katsumata and others voiced their ideas on appointing new corporate officers, but their suggestions were reportedly rejected by the government.

Shimokobe picked Hirose as the new president, saying Hirose, 59, has the zeal to reform the power company.

Many of TEPCO's former presidents have backgrounds in planning or general affairs.

The appointment of Hirose, whose experience is mainly in sales, is a rare case. Initially there was a proposal to select a new president from outside the board of directors. However, a decision was made to appoint someone from within the board out of consideration for the company's internal harmony.


Hikes envisioned

Under the new leadership, TEPCO will set up a management reform headquarters, which will be directly under the command of Hirose and Shimokobe.

The new office, which will tackle various business challenges, will have 20 to 30 staffers, including those from the fund as well as the power utility's young and midcareer employees.

TEPCO aims to raise household electricity rates by about 10.3 percent from July.

The company raised prices for large-lot consumers in April, but did not provide sufficient explanation, creating resentment among consumers, and leading some firms to refuse the hikes.

At the Tuesday press conference, Hirose said, "Taking the lesson from last time into consideration, we will thoroughly streamline the company, and then carefully explain the necessity of the hikes to consumers."

At the same press conference, the incoming president emphasized he would work on restarting reactors at the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture. Without resuming operations at nuclear plants, which produce power more cheaply than other facilities, TEPCO's financial situation will not improve, forcing it to raise fees drastically.

However, in Niigata Prefecture strong distrust remains toward the company. Niigata Gov. Hirohiko Izumida maintains a cautious approach on the issue, casting a shadow over the prospect of restarting the reactors.

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