Tokyo Electric Power Co. will not seek higher electricity rates but instead ask the central government for about 700 billion yen ($9 billion) to compensate victims of the Fukushima No. 1 nuclear plant accident, sources said.
TEPCO officials have determined that amount will be needed for compensation payments in the current fiscal year, the sources said. They are now in discussions with officials of the agency established in September to handle compensation assistance from the central government.
The figure was calculated based on the continued evacuation over the next several months of residents from communities in the vicinity of the Fukushima No. 1 plant as well as the inability of companies in those areas to resume operations.
Although the possibility exists that the figure could be higher, the sources said TEPCO officials would not include any possibility of an electricity rate increase in its "emergency special business plan" that will be compiled with the compensation support agency.
The utility will consider the rate increase issue when it compiles a "comprehensive special business plan" next spring. Officials at one time were considering asking for a 15-percent rate hike.
TEPCO officials apparently decided that now was not the right time to apply for a rate increase because Yukio Edano, the economy, trade and industry minister, has established a study panel of experts to review the electricity rate system by early next year.
Before TEPCO can receive any funds from the central government, Edano will have to approve the emergency special business plan.
TEPCO officials are expected to include in that plan their compensation amount estimate as well as a number of restructuring measures, such as cutting personnel expenses. They hope to have the special business plan approved by early November so they can include the amount and contents of central government support when they announce in mid-November the financial statements for the six-month period ending in September 2011.
While TEPCO will receive the government funding from the compensation support agency, the company will be required to repay the amount in annual installments from any profits that it generates.
Moreover, if the compensation payments for the next fiscal year and beyond should increase, TEPCO may be forced to ask for additional funds from the central government.