TEPCO to Seek Govt Approval for Household Rate Hike
13:36 JST, January 21, 2023
TOKYO — Tokyo Electric Power Company Holdings Inc. plans to apply as early as this week for government approval to raise its regulated electricity rates for households, it was learned Friday.
The plan reflects a decline in earnings at the power supplier due to surges in prices for liquefied natural gas and other fuels for power generation, against the backdrop of the Russian invasion of Ukraine.
It would be the first time since 2012 for TEPCO to seek approval for a regulated household rate hike.
If the planned application is approved, TEPCO is expected to raise the rates by around 30% in or after June, affecting over half of TEPCO’s customer households.
Hokkaido Electric Power Co. also plans to seek government approval soon.
In Japan, there are two types of household electricity rates—regulated rates, which require government approval for a revision, and discretionary rates, which power companies can revise freely.
In November last year, five major power companies—Tohoku Electric Power Co., Hokuriku Electric Power Co., Chugoku Electric Power Co., Shikoku Electric Power Co. and Okinawa Electric Power Co. —sought government approval to raise their regulated household electricity rates by an average of between 28% and 45% in April.
The industry ministry has started screening their applications, which usually takes about 4 months.
In order to gain government approval, power companies need to make business streamlining efforts such as reviewing labor and other operational costs. The size of rate hikes could be narrowed depending on the screening results.
Under the country’s existing price adjustment system, power companies are allowed to reflect higher fuel costs in regulated electricity rates to some extent.
In September last year, however, TEPCO’s rates reached the upper limits under the system. Since then, it has been shouldering higher fuel costs without passing them on to customers.
TEPCO plans to calculate the size of rate increases while factoring in to some extent the possible resumption of its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture, central Japan.
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