Despite growing criticism over its billing practices, Tokyo Electric Power Co. plans to increase electricity charges by about 15 percent for three years -- and resume full bonuses for employees when the fee hike ends.
Despite growing criticism over its billing practices, Tokyo Electric Power Co. plans to increase electricity charges by about 15 percent for three years -- and resume full bonuses for employees when the fee hike ends.
The plan was presented to the government's investigation committee on TEPCO's management and finance, which is scrutinizing the company's assets for compensation over the accident at the Fukushima No. 1 nuclear power plant.
The planned increase in electricity charges would raise the monthly fee for an average household by about 1,000 yen ($13) from the current level of just under 7,000 yen.
TEPCO says the higher fees are needed to cover additional fuel expenses, estimated at about 1 trillion yen annually, for thermal power generation that will make up for the nuclear power plants shut down following the Fukushima accident.
The company is also considering ending its 50-percent cut in employee bonuses in fiscal 2015 if nuclear power plants, currently suspended for regular inspections, are back online, even though the compensation process for the accident is expected to continue well past that year.
New industry minister Yukio Edano and members of the investigation committee have already questioned the way TEPCO and other electric power companies determine their electricity charges. Some members suggested that consumers have long been unfairly hit with inflated utility bills.
"TEPCO has not made sufficient efforts to reduce costs," Edano told a news conference on Sept. 13. "I believe other electric power companies have similar problems."
Under the Electric Utilities Industry Law, a power company determines electricity charges by adding profits -- about 3 percent of the value of its assets such as power stations -- to estimated annual costs, including personnel, fuel and repair expenses.
The system supports stable management of power companies, which are virtually regional monopolies.
But the investigation committee found some categories of TEPCO's estimated generation costs constantly went above the actual expenditure levels, leading to potentially inflated electricity charges.
"We cannot overlook (the differences) when they are accumulated for 10 years," Kazuhiko Shimokobe, chairman of the investigation committee, said.
At a committee meeting on Sept. 6, members said transparency must be secured for the system to calculate electricity charges.
"We need to investigate whether advertising expenses or expenditures to a trade group should be included in the generation costs," one member said.
The investigation committee will put together a report by the end of September. Its contents will be reflected in a special business plan, including cost-cutting restructuring measures, which TEPCO will compile with the government-backed compensation support organization in October.
The business plan is required for TEPCO to receive support from the government and other entities for providing compensation to victims of the Fukushima accident.
As part of its restructuring measures to generate funds for compensation and ending the nuclear crisis, TEPCO has reduced employees' salaries by 5 percent and their bonuses by 50 percent since July.
The company plans to keep the salary cut in place until the compensation process is complete.
Fifteen of TEPCO's 17 nuclear reactors are currently shut down, including those at the Fukushima No. 1 and No. 2 plants. The two remaining reactors are expected to be shut down by March.
It is not clear how many nuclear reactors TEPCO expects to restart by fiscal 2015, when the company plans to end the fee hike to pay for increased fuel costs and resume full bonuses for its employees.
(This article was compiled from reports by Naoyuki Fukuda and Toru Nakagawa.)