Tokyo Electric Power Co.’s plan to raise electricity rates by an average of 17 percent has drawn criticism from industrial users, which were forced to cut consumption after the accident at the Fukushima No. 1 nuclear power plant.
Tokyo Electric Power Co.’s plan to raise electricity rates by an average of 17 percent has drawn criticism from industrial users, which were forced to cut consumption after the accident at the Fukushima No. 1 nuclear power plant.TEPCO said Jan. 17 it will increase rates for large-scale users, such as factories and office buildings, in April to cover added fuel costs for thermal power plants, which have been mobilized to make up for lost capacity at nuclear power plants.The increase, which will affect about 240,000 business facilities, will be the first since 1980.TEPCO, which serves the Kanto region, also plans to apply for government approval in the first half of 2012 for increasing rates for households to improve its earnings.“It will be difficult to get out of the red only with the planned rate hike alone,” TEPCO President Toshio Nishizawa said at a news conference on Jan. 17.Tokyo Steel Mfg. Co., which uses electric furnaces to produce steel, estimates that its electricity charges could increase as much as 40 percent.“A rate hike is a crucial issue that affects our operations. It is extremely regrettable,” a company representative said.Tokyo Steel is considering relocating production of some products from its main factory in the Kanto region to western Japan, which will push up transportation costs.Fuji Heavy Industries Ltd., which operates its main automobile plant in Ota, Gunma Prefecture, expects that its costs will increase by several hundreds of millions of yen.“We cannot go away somewhere else," a Fuji Heavy representative said. "The only thing we can do is to save electricity and lower costs.”At a news conference on Jan. 17, Yasuchika Hasegawa, chairman of Keizai Doyukai (Japan Association of Corporate Executives), said, “TEPCO needs to explain the basis for the rate hike and its duration from the standpoint of users.”Companies may turn to alternative suppliers.The Daimaru Peacock chain of supermarkets already buys electricity from producers other than TEPCO for 17 of its 28 independently operated outlets.A Daimaru Peacock official said the company could further lower the amount contracted with TEPCO.A senior official at a major automaker called for government support, counting the increase in electricity rates as one of the six woes facing the industry, which also include the strong yen.Electronics manufacturers have also expressed dissatisfaction.“We cannot tell whether we can absorb the rate increase,” a Toshiba Corp. official said.An NEC Corp. official added, “We have to further save electricity, but we cannot find good ideas anymore.”TEPCO officials said that without a rate increase, the company will continue to post losses, which will make it difficult to procure fuel and supply electricity.The rate increase in April will bring in an additional 400 billion yen ($5.22 billion). The company said it determined new rates to cover much of the anticipated increase in fuel costs.TEPCO expects fuel costs will reach 3.05 trillion yen in fiscal 2012, up 686.5 billion yen from the amount in fiscal 2008. Current electricity rates were calculated based on the fiscal 2008 figure.It plans to reduce overall costs by 193.4 billion yen.Government approval is not necessary for increasing rates for industrial users. TEPCO will negotiate new rates with companies and organizations individually.The rate increase in April will cover business facilities with a contract for 50 kilowatts or more. In addition to households, small stores will not be affected.The increase will be 2.58 yen per 1 kilowatt-hour for facilities with a contract of 2,000 kilowatts or more, such as factories and department stores.The margin will be 2.61 yen for smaller facilities with a contract of less than 2,000 kilowatts, such as supermarkets and offices.According to TEPCO, a department store that pays 274 million yen a year on electricity will have to pay an additional 49.54 million yen, or 18.1 percent, while a grocery that pays 7.73 million yen a year on electricity will have to pay an additional 1.03 million yen, or 13.4 percent.