What can be behind rate increases

June 17, 2013

KEPCO rate hikes found to include costs for empty company housing units

http://mainichi.jp/english/english/newsselect/news/20130617p2a00m0na009000c.html

Customer rate increases demanded by the Osaka-based Kansai Electric Power Co. (KEPCO) beginning in May have included upkeep costs for a total of some 70 empty units within five company housing and dormitory properties, it has been revealed.

During a review previously undertaken in conjunction with the price increases, it had been revealed that fee reduction appraisals were being assessed for maintenance costs associated with housing properties with a large number of unoccupied units. However, the recent discovery made it clear that electricity fees were including the upkeep fees for completely unoccupied buildings, which is certain to draw criticism from customers.

Electricity fees are derived by calculating the necessary fees (initial costs) for providing power, as well as factoring in the ability to derive profits. In applying for a fee hike this year, KEPCO submitted documents to the Ministry of Economy, Trade and Industry calculating the costs for the approximately 250 buildings that were leased from outside companies and utilized for company housing and dormitories (totaling some 5,000 individual units) as part of initial costs. Permission from the ministry was asked for, and granted, to reflect such costs within customer fees.

The inclusion of the fees within the total cost calculations was discovered when the Mainichi obtained copies of these internal documents, and spoke with ministry officials who revealed that the number of occupants within the five buildings in question was zero in fiscal 2012, and that the projected number of occupants within the same buildings for the period up to fiscal 2015 was also zero.