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15 Février 2012
February 15, 2012
A fierce tug-of-war between the government and Tokyo Electric Power Co. over the utility's management is becoming more apparent as the government seeks a level of control over the company.
On Monday, Economy, Trade and Industry Minister Yukio Edano urged TEPCO President Toshio Nishizawa to concede the company's management rights to the government.
However, TEPCO has not changed its unyielding stance that the company should remain private, not government-run.
The fight between the government and TEPCO is making the prospects of solving important issues, such as rate hikes and management reform, unclear.
"I have no intention to approve injecting public funds [to TEPCO] while it does not give the government voting rights proportionate to the amount of money it provides," Edano said at Monday's talks with Nishizawa.
"The [finance] minister's stance is not something we can take lightly. However, to utilize the power of private enterprise is essential in the business world, and the electricity industry is no exception. We want to carefully discuss [management rights] before drawing a conclusion," Nishizawa said after the meeting.
The government plans to obtain a certain amount of TEPCO shares after injecting about 1 trillion yen in public funds to the power company. The point of contention is the proportion of voting rights the government would acquire. Edano plans to obtain at least a majority of voting rights, and, if possible, intends to acquire two-thirds of voting rights. The minister is believed to have the aim of taking over TEPCO's management and taking the initiative in reforming it. In the end, this could pave the way for separating power generation from power transmission and distribution--all of which are presently handled by utilities.
However, TEPCO has resisted conceding unconditionally to Edano's requests.
TEPCO's bottom line is to maintain its status as a private enterprise with management independence. TEPCO is able to maintain a hard-line stance because the government does not have a unified opinion on the amount of voting rights it should have.
On Monday, Chief Cabinet Secretary Osamu Fujimura distanced himself from Edano's remarks on voting rights. "His remarks have not achieved consensus in the government," Fujimura said at a press conference Monday.
Observers say Edano's remarks reflect his irritation with TEPCO's unyielding stance. The economy minister tried to break the impasse by also taking a tough stand with the utility, the observers said.
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TEPCO's electricity rate hike plan
One of the major reasons Edano hardened his attitude toward TEPCO is the company's plan to raise electricity rates without consulting the government.
In January, TEPCO announced it would seek an average 17 percent increase in electricity charges for corporate users without sufficiently explaining the plan to Edano.
Earlier, the power company had announced its intention to raise electricity charges for households, although the government had not yet decided its stance on the issue. The announcement created a stir in the government.
Earlier this month, the economy ministry asked power companies to revise their methods of calculating household electricity charges. The ministry asked the companies to lower the wage levels they used in calculating labor costs, which are significantly higher than wage levels of ordinary companies.
The current method for calculating the electricity rate for households is to first add up all costs--including labor and fuel costs--and then decide on an amount of profit to be added.
The ministry also asked power companies to exclude donations to industry organizations in calculating electricity rates.
The power companies' review on calculating rates for households is expected to end by summer. Nishizawa has suggested the power company would reduce the average 17 percent rise in electricity rates for large-lot users--factories and offices--after the summer. Observers said Nishizawa intends to secure a profit through the 17 percent increase, and then reduce rates.
However, TEPCO's plan provoked an angry backlash from the Tokyo metropolitan government, other local governments and private companies. Edano is demanding the utility reflect the company's revised cost calculations as soon as possible in deciding rates for corporate users.
"I would like to ask [TEPCO] to promise the review on calculating the cost will be reflected in charges for corporate users," Edano said Monday.
However, Nishizawa refrained from making a firm commitment to Edano. "There has been a lack of explanation to corporate users [on electricity rate hikes]. We'll improve the situation and explain the matter thoroughly," he said.
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Reconstruction plan still vague
The utility plans to draw up its business reconstruction plan in March.
Edano has urged TEPCO to show the details of the "new" TEPCO in the reconstruction plan. However, details of the plan are still unclear.
According to sources, a proposal to introduce a committee governance structure to increase management transparency will be included in the plan. However, it is not clear how much Edano, who is demanding bolder steps from TEPCO, will see his intentions reflected in the reconstruction plan.
"I would like to ask [TEPCO] to recognize that the company is starting afresh, and to clearly show [in the reconstruction plan] that it will take bold steps in restructuring its business and changing company mentality," Edano said.
"We are now discussing a new style for our company, but there are ideas that need to be developed--we want to reveal the details in the reconstruction plan," Nishizawa said.
Takashi Shimada, director general of the Nuclear Damage Liability Fund, was not optimistic. "It is uncertain how much the government can do [to reform TEPCO] as a creditor and within the framework of the current electricity system," Shimada said.
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