TEPCO's rate hike to cover thermal power generation

TEPCO raises household electricity rates by 8.46%

http://mainichi.jp/english/english/newsselect/news/20120901p2g00m0dm003000c.html

TOKYO (Kyodo) -- Tokyo Electric Power Co. on Saturday raised electricity rates for households by an average 8.46 percent in response to the heavy financial burden stemming from the Fukushima Daiichi nuclear power plant disaster last year.

About 28.7 million contracts with households, small offices and stores in its service area including Tokyo are subject to the rate hike. For a standard household using 290 kilowatt hours per month under a 30 ampere contract, the monthly power bill will rise by 347 yen, or 4.82 percent, from August to 7,548 yen.

TEPCO says the main reason for the hike is to help cover rising fuel costs for non-nuclear thermal power generation to compensate for the halt in nuclear power generation following the Fukushima disaster, triggered by the March 2011 earthquake and tsunami.

Higher fuel costs have become common among regional power utilities across the country, where most nuclear power plants remain suspended amid safety concerns.

Some economists expect utilities other than TEPCO to also consider rate hikes to overcome their tough business conditions.

It is the first time since the 1979-1980 oil crisis that TEPCO has resorted to a major rate hike based on a thorough cost review.

TEPCO had initially applied to the government to raise household electricity rates by an average 10.28 percent. But the government has called on the utility to slash personnel and other costs amid a public backlash, forcing it to trim the hike to 8.46 percent.

Other utilities would also have to undergo such government-led screening processes if they apply for rate hikes for households, which require the approval of the economy, trade and industry minister.

The Japan Research Institute said in a report on Aug. 7 that electricity rate hikes would become "inevitable" across the country amid a prolonged suspension of most nuclear reactors and that increased power bills may eventually have a "considerable impact" on households and businesses.

According to its estimate, the country's 10 regional utilities will see fuel costs for non-nuclear thermal power generation grow by between 3.7 trillion and 4.3 trillion yen in fiscal 2012 from fiscal 2010.

If the utilities try to recover the rise in costs from electricity users, they may need to raise power bills by between 26.9 percent and 31.3 percent compared with fiscal 2010, which would mean an additional annual burden of up to around 37,000 yen on households composed of two or more people, the report said.

After the government approved the rate hike, TEPCO received 1 trillion yen in public funds from a state-backed bailout fund on July 31, a move that put the company under effective state control.

TEPCO's electricity rates for corporate users have already been raised by an average of 14.9 percent.