The government’s review of Tokyo Electric Power Co.’s application for raising household electricity rates is now in its final stage.
The huge costs incurred by last year’s disaster at TEPCO’s Fukushima No. 1 nuclear power plant will have to be covered, to some extent, by consumers through higher electricity bills. But the government needs to rigorously check the cost estimates by the utility to determine whether the planned hikes are reasonable.
TEPCO has applied for government permission for rate increases averaging 10.28 percent.
Last week, a committee of experts at the Ministry of Economy, Trade and Industry drew up a provisional policy that called for reducing the hikes to the lower 9-percent range. The ministry’s committee is discussing the matter with a Consumer Affairs Agency panel to make the final decision.
Consumer groups are lobbying for TEPCO to further cut costs. The key question raised by such calls is which costs should be curtailed.
The most obvious target is personnel expenses.
The Consumers Affairs Agency is demanding 30-percent cuts in the annual salaries of TEPCO employees instead of the 20-percent reduction the industry ministry panel has endorsed. A 30-percent pay cut was the norm among companies that were bailed out with taxpayer money in the past.
We can understand the gripes among consumers, who can’t choose their power suppliers freely under the current setup.
But TEPCO now needs more manpower because of the additional work related to the crippled reactors, compensation payments to victims of the nuclear disaster and the expanded operations of thermal power plants to make up for the loss of nuclear power.
Unlike Japan Airlines Co. and Resona Bank, which were also rescued with public funds, TEPCO effectively monopolizes the regional power market, with no alternative supplier available.
All these factors impose a limit to cuts in personnel costs.
Rather than the salaries of the utility’s employees, the costs related to the Nos. 5 and 6 reactors at the Fukushima No. 1 nuclear plant and the Nos. 1 to 4 reactors at the Fukushima No. 2 plant should be re-examined.
TEPCO has estimated the total depreciation and maintenance costs of these reactors at 90 billion yen ($1.13 billion).
The Fukushima prefectural government has demanded that all reactors within the prefecture be decommissioned.
There is no doubt that these six reactors are at the top of the government’s list of candidates for decommissioning under its policy to reduce the nation’s dependence on atomic energy.
TEPCO itself has voluntarily excluded the costs concerning these reactors from its estimation of profits from its operations.
It doesn’t make sense to include nonperforming assets in the factors for calculating the costs on which power rates are based.
Even if it is difficult to immediately exclude all the costs related to the reactors from the estimation, at least a certain reduction--say a 50-percent cut--is possible.
The industry ministry panel remained divided until the last moment on this issue.
What complicates the matter is the fact that the public will eventually have to foot the bill, even if rate hikes are reduced through a cut in the cost estimate. TEPCO will have to dip into its profits to cover the costs excluded from the cost calculation for deciding on power charges.
But the utility is supposed to use its profits to pay back the money it receives from the government for compensation payments. An increase in the costs the company cannot pass on to consumers through its power rates will inevitably delay TEPCO’s repayments.
Given the gargantuan financial burden of dealing with the consequences of the Fukushima meltdowns, including the costs of cleaning up areas contaminated with radiation, the current financing framework, which requires TEPCO to shoulder all the costs, is nothing but a fantasy.
Serious, full-scale public debate should start on how much of these costs should be shouldered by TEPCO’s clients and how much should be shared widely by taxpayers after exhaustive efforts for restructuring are made by the utility.
--The Asahi Shimbun, July 10
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