The president of Tokyo Electric Power Co. predicted that the embattled utility can return to profitability for the current fiscal year by cutting costs even without restarting a third nuclear power plant or raising electricity rates.
The president of Tokyo Electric Power Co. predicted that the embattled utility can return to profitability for the current fiscal year by cutting costs even without restarting a third nuclear power plant or raising electricity rates. Naomi Hirose told The Asahi Shimbun in Tokyo's Chiyoda Ward on Sept. 28 that expenses for fiscal 2013 can be reduced by delaying part of planned repairs of its power generation and transmission equipment to fiscal 2014. The prospect for posting a profit for the fiscal year ending in March means that TEPCO will be eligible to secure new loans from financial institutions, including three megabanks. Securing a pre-tax profit is a condition for TEPCO to be extended new financing. The utility's business outlook improved with the possibility of bringing two reactors at the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture online in fiscal 2014. TEPCO on Sept. 27 applied for checks of reactors No. 6 and No. 7 by the Nuclear Regulation Authority, which assesses if a nuclear facility meets the new safety standards before its reactors can be restarted. The move came after Niigata Governor Hirohiko Izumida finally gave consent to the company’s plan to proceed with the application after months of refusal. “There is the possibility that we can resume operations during the next fiscal year,” Hirose said, referring to the two reactors at its Kashiwazaki-Kariwa plant. TEPCO owns three nuclear power plants--the Fukushima No. 1 and No. 2 nuclear power plants in Fukushima Prefecture, both of which were damaged by the Great East Japan Earthquake and tsunami on March 11, 2011, and the Kashiwazaki-Kariwa plant on the Japan Sea coast. The latter has seven reactors. Although the company sought to log a profit for the current fiscal year by delaying part of repairs of equipment to the next fiscal year, financial institutions were not sold on the plan. They were concerned that the move to push back capital expenditures could imperil the financial standing of TEPCO in fiscal 2014. However, with the possibility of the two reactors going back online in the next fiscal year, Hirose said the financial institutions’ concerns over the utility’s financial troubles eased. TEPCO trimmed costs by 500 billion yen ($5.09 billion) for fiscal 2012 through reducing repair and personnel expenses. “Additional cost cutting will help the company to return to profitability for the current fiscal year,” Hirose said. After logging pre-tax losses in fiscal 2011 and 2012, the company also posted 29.4 billion yen in pre-tax losses for the first half of fiscal 2013. The utility estimated that restarting a single reactor at the Kashiwazaki-Kariwa nuclear power plant will result in an increase of more than 100 billion yen in profits. Hirose also said that the company will not consider a hike in electricity rates for the time being to increase earnings for the current fiscal year. The rate hike was regarded as a key step to improving the company’s financial standing, along with bringing an idled reactor online. But the TEPCO president did not completely rule out the possibility of raising electricity rates. He cited fluctuations in currency markets and crude oil prices as well as the safety checks, which could take longer than the expected six months or so. (This article was written by Takashi Ebuchi and Mari Fujisaki.) * * * Excerpts of the interview follow: But applying for a safety screening led to more communications with local governments (in Niigata Prefecture). We began briefings in Kashiwazaki and Kariwa (the two municipalities that host the plant). The three months we had to wait until actually filing the application, I believe, was time needed to gain understanding to our position.