In a restructuring plan for embattled Tokyo Electric Power Co., the utility will raise household power rates by 10 percent from July and take a 1 trillion yen ($12.3 billion) injection from the government, which will effectively nationalize it.
The comprehensive special business plan was compiled by the government-backed Nuclear Damage Liability Facilitation Fund and TEPCO, which operates the crippled Fukushima No. 1 nuclear plant. It is expected to be submitted to the government on April 27.
Under the restructuring plan, the government's investment will allow it to obtain more than a 50 percent share of voting rights in TEPCO.
It also calls for the suspended Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture to be brought back online by the end of fiscal 2013.
Regarding the restart, however, TEPCO could be accused of not heeding lessons from the Fukushima accident, and not obtaining local support. In regards to the 10 percent rate hike, calls could rise for further cuts in personnel costs.
With the rate increase and the restart of the nuclear plant, the plan forecasts that TEPCO will post a net profit of about 100 billion yen in fiscal 2013. It says the utility can lower rates for households and businesses in fiscal 2015.
The amount saved through payroll-cost reductions and other streamlining measures will rise to more than 3 trillion yen over a decade from an initial 2.6 trillion yen, according to the plan.
The government investment of 1 trillion yen for compensation payments stemming from the nuclear disaster will garner TEPCO stock both with and without voting rights.
The plan allows the government to switch stock without voting rights to one with rights if the company fails to meet those profit and cost-reduction goals. With voting rights of more than two-thirds, the government would be able to change TEPCO’s basic corporate governing rules.
The government intends to recoup its investment by having the company buy back the stock. But it is unclear how much costs to decommission the Fukushima plant and compensation over the accident will balloon. The effective nationalization process could last more than 10 years.
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