Embattled Tokyo Electric Power Co. will pay more than 300 billion yen ($3.8 billion) for electricity it likely will never get.
Embattled Tokyo Electric Power Co. will pay more than 300 billion yen ($3.8 billion) for electricity it likely will never get.
The paymments form part of the basis for the proposed 10-percent hike in household utility bills.
TEPCO will pay 100.2 billion yen annually to Japan Atomic Power Co. and Tohoku Electric Power Co. over three years from fiscal 2012 under long-term contracts to purchase electricity from three nuclear power plants.
The problem is that those plants have been shut down, and will probably stay idle due to public anxiety following the disaster at the Fukushima No. 1 nuclear power plant last year.
An industry ministry committee looking into the proposed hike will consider whether the payments can be reduced or excluded from the basis for the increase in electricity bills.
If the payments are not factored in, the rate increase will drop to less than 9 percent on average compared with the proposed 10.28 percent.
TEPCO, which plans to raise rates to cover increased fuel costs due to shutdowns of nuclear power plants, presented the outline of its contracts at a committee meeting on June 4.
Some panel members questioned why household users should shoulder the payments for other utilities’ nuclear power plants that are expected to remain offline.
Under the contracts, TEPCO is required to pay fixed costs even if the plants do not generate electricity.
The fixed costs include depreciation and repair costs for the two utilities’ nuclear facilities, salaries of executives and employees, advertisement fees, and donations to local governments.
The three plants are Japan Atomic Power’s Tokai No. 2 power station and Tohoku Electric Power’s Onagawa and Higashidori nuclear power plants.
In fiscal 2008, TEPCO purchased 10.6 billion kilowatt-hours of electricity from the three plants and paid a combined 100 billion yen.
TEPCO officials said the payments will increase in the three years from fiscal 2012 because repair and inspection costs have risen due to damage caused by the Great East Japan Earthquake of March 11, 2011.