TEPCO will re-examine 17 percent corporate rate hike

January 31, 2012

Tokyo Electric Power Co. will take a second look at a proposed electric rate hike for corporate customers that will start in April, after feeling the heat from the central government and the business sector.

But the review won't begin until autumn, and any reduction in the increase, which will average about 17 percent, is expected to be a small one.

The utility is expected to raise rates for household use from this autumn based on new calculation standards, and the review of the electric rate hike for corporate customers will occur at the same time, sources said.

TEPCO announced on Jan. 17 that it was raising rates for corporate customers by an average of about 17 percent. The hike was calculated based on an expected increase in fuel costs while also subtracting the savings that are expected from streamlining measures. The higher fuel costs are due to a shift to thermal power plants in the wake of last year's accident at TEPCO's Fukushima No. 1 nuclear power plant.

The announcement was met with anger by industrial users, who were forced to cut back on usage after the accident.

While TEPCO has the discretionary authority to raise the rate for its large-volume corporate customers, it has to receive central government approval for any rate increases for household users. Yukio Edano, the economy minister, criticized the TEPCO announcement because most corporate customers have no alternative but to buy electricity from the utility.

Officials at the Ministry of Economy, Trade and Industry are expected to compile new calculation standards in February that reduce expenses involved in TEPCO operations. The utility plans to use those new standards to calculate a rate increase for household users that the utility hopes to put in place from this autumn. Once the calculation standards are decided upon, TEPCO is expected to apply for an increase in rates for households in the spring.

TEPCO will recalculate the rate increase for corporate customers once the new calculation standards are in place because the type of costs involved are generally the same regardless of whether the electricity goes to corporate or household users. Sources said TEPCO is already negotiating with its major corporate customers about the rate hikes to be implemented from April, making it difficult to review the increase before this autumn.

Because the 17-percent rate hike already takes into consideration streamlining measures to be implemented by TEPCO from the new fiscal year, any shrinkage in the increase for corporate customers will probably be a small one. While it is uncertain when the revised rate hike for corporate customers will be put in place, TEPCO officials are seeking to implement the change over the next year.

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Tokyo Electric Power Co. head office in Tokyo (Louis Templado)

Tokyo Electric Power Co. head office in Tokyo (Louis Templado)

  • Tokyo Electric Power Co. head office in Tokyo (Louis Templado)

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