Business leaders blast TEPCO's planned rate hike in April

February 17, 2012

A chorus of criticism is emerging from business leaders over plans by the embattled Tokyo Electric Power Co. to sharply hike electricity bills for companies in April.

This is due in large part to the fact that companies cannot easily switch to other power suppliers--and get cheaper rates--as TEPCO effectively operates a regional monopoly.

Also muddying the waters is TEPCO’s reluctance to offer specifics on its cost-cutting efforts.

In a news conference on Feb. 16, Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association (JAMA), opened his remarks by saying, "I want to explain the ramifications of the planned 17 percent increase in electric bills in an easy-to-understand manner."

According to Shiga, an increase of that magnitude would add between 2,000 yen and 3,500 yen (about $25 to $44) to the production cost of a single car.

"Given the extremely strong yen, we are doing everything we can to reduce costs," he said. "Only when TEPCO is making similar efforts will we be able to understand that it (TEPCO) has no other choice."

Shiga is also Chief Operating Officer of Nissan Motor Co.

The yen's appreciation, coupled with the sovereign debt crisis in Europe, is forcing Japanese companies to close factories or slash employment one after another.

The planned rise in electric bills threatens to deal another blow to them.

"We are serious about our cost-cutting efforts, and we will suffer," said the president of Fujitsu Ltd., Masami Yamamoto, referring to the company's business performance if electricity rates are increased.

The steel industry expects to incur additional annual costs of some 20 billion yen if TEPCO goes ahead with the increase.

In the case of Tokyo Steel Co., which often operates factories at night and on holidays, “Our electric bills could rise by 40 percent,” a public relations official for the company said.

Small and midsize companies involved in casting and can manufacturing are also in an uproar.

"We earnestly request that TEPCO give consideration to the plight of small and midsize companies," said Tadashi Okamura, chairman of the Japan Chamber of Commerce and Industry and also an adviser to Toshiba Corp.

On Feb. 16, the Japan Chain Stores Association, which mainly represents supermarket operators, sent TEPCO a letter objecting to the planned increase in utility rates and asking it to reconsider.

“We have grave fears the increase will seriously affect the management (of our member companies) and have a strong negative influence on the economy," the letter said.

But TEPCO sees no reason to back down.

"If the rise in fuel costs is simply passed on through higher electric bills, the rise would actually be 22 percent. But we managed to reduce this figure by 5 percent (to 17 percent) through our cost-cutting efforts," a TEPCO representative said.

In a Feb. 13 news conference, Hiromasa Yonekura, chairman of Keidanren (Japan Business Federation), Japan’s largest business organization, defended TEPCO.

"We must put our trust in TEPCO," said Yonekura, who is also the chairman of Sumitomo Chemical Co.

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Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, criticizes Tokyo Electric Power Co.’s plan to raise electric bills for companies during a news conference held in Tokyo’s Minato Ward on Feb. 16. (Kaname Kakuta)

Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, criticizes Tokyo Electric Power Co.’s plan to raise electric bills for companies during a news conference held in Tokyo’s Minato Ward on Feb. 16. (Kaname Kakuta)

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  • Toshiyuki Shiga, chairman of the Japan Automobile Manufacturers Association, criticizes Tokyo Electric Power Co.’s plan to raise electric bills for companies during a news conference held in Tokyo’s Minato Ward on Feb. 16. (Kaname Kakuta)

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