90% of companies oppose TEPCO's rate hike

March 28, 2012

By KENTARO UECHI/ Staff Writer

Nearly 90 percent of companies oppose Tokyo Electric Power Co.’s planned rate increase, but the higher charges will be imposed as scheduled, the utility said on March 27.

TEPCO will raise the rates by an average 17 percent for 240,000 businesses starting on April 1. It said only about 30,000 companies have accepted the hike.

The utility, which holds a regional monopoly that includes the Tokyo metropolitan area, renews contracts on a company by company basis every year.

TEPCO’s contracts with about 50,000 companies are up for renewal on April 1, when the rates will increase. Only about 3,300 businesses, or less than 10 percent, have agreed to the higher charges.

Among the roughly 187,000 companies whose contracts are scheduled for renewal on April 2 or later, only 26,850 have accepted TEPCO’s plan, the utility said.

TEPCO has promised to continue supplying power even if companies refuse to pay the higher rates after the contract renewal dates. But the utility said there is a limit on how far it will let things slide.

The company could cut power to businesses that refuse to pay the higher charges after about 50 days. That means defiant companies with an April 1 contract renewal could see their power cut by around May 22 at the earliest.

Kenji Kamakura, director of TEPCO’s corporate sales division, said the company will seek the consent of the companies before supply cuts actually occur.

“The company will offer a full explanation to obtain understanding,” Kamakura said.

TEPCO, which recently shut down its last running reactor for regular maintenance, is struggling financially under increased fuel costs for its thermal power plants, as well as rising expenses to compensate victims of the accident at its Fukushima No. 1 nuclear power plant and the continuing battle to end the nuclear crisis.

The company initially expected annual sales to grow by 400 billion yen ($4.81 billion) by raising rates for all businesses from April 1, regardless of the contract renewal date. But facing a strong backlash, TEPCO decided to introduce higher rates in line with contract renewals from April 1.

TEPCO said that decision will reduce the expected sales increase by 100 billion yen.

The utility also said it will introduce newcomer suppliers to businesses if it is asked to do so. However, these smaller utilities can provide only limited amounts of electricity.

Most businesses are believed to have no choice but to continue relying on TEPCO for electricity.

By KENTARO UECHI/ Staff Writer
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Toshio Nishizawa, president of TEPCO (Asahi Shimbun file photo)

Toshio Nishizawa, president of TEPCO (Asahi Shimbun file photo)

  • Toshio Nishizawa, president of TEPCO (Asahi Shimbun file photo)

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