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Customer Communication


Electricity rate raise in the deregulated section

Q.
What kind of customers is covered with the deregulated section?
A.
In concrete terms, the deregulated section covers extra-high-voltage customers (standard voltage: 20,000V or more), such as buildings and factories, and high-voltage customers (standard voltage: 6,000V or more).
Q.
I have concluded a contract with TEPCO under the name of my company. In this case, do I belong to the deregulated section?
A.
Even if you have concluded a contract with TEPCO under the name of your company, you will not belong to the deregulated section as long as you are a low-voltage customer (standard voltage: 100V or 200V).
Q.
Are you planning electricity rate hike for residential customers as well?
A.
We need to apply for government approval if we intend to raise electricity rate for low-voltage customers, including residential customers (these customers belong to so-called the "regulated" sector). For this reason, in line with the drafting process of "Comprehensive Special Business Plan" and discussions at "Expert Panel to Review Electricity Rate System and Its Operation," we would like to file necessary applications to the central government as soon as possible.
Q.
How much are you going to raise the electricity rate?
A.
The new electricity rate's unit price is increasing uniformly to the original rate by 2.58 yen/kWh for extra-high-voltage customers and 2.61 yen/kWh for high-voltage customers (The increased unit prices include tax).
We will not reexamine the basic rate this time.

For more information, see our press release, "Regarding Electricity Rate Raise for Customers in the Deregulated Section."
Q.
Why are you planning the electricity rate hike?
A.
To address damages on Fukushima Daiichi and Daini Nuclear Power Stations resulting from the Great East Japan Earthquake on March 11, 2011, and prolonged shutdown at Kashiwazaki-Kariwa Nuclear Power Station, we are striving to maintain and provide stable electricity supply by enhancing thermal power plant operations and resuming operations at long-term idle thermal power plants.
As a result, we are facing significantly severe financial position because of a sharp rise in fuel cost as well as massive net-account deficit for two consecutive terms. We will further intensify our cost-cutting efforts as much as possible in the next term onward, but it is extremely difficult to break away from such severe financial position. If the current condition continues, we will face difficulty in fuel procurement in the near future and probably fail to fulfill our mission to provide stable electricity supply. We regret to inform you that we have no choice but to raise electricity rate for customers in the deregulated section on April 1, 2012.

For more information, see our press release, "Regarding Electricity Rate Raise for Customers in the Deregulated Section."
Q.
Is the fuel cost adjustment system insufficient to cover higher fuel cost?
A.
In the fuel cost adjustment system, electricity rate reflects fluctuation of fuel prices for the fuel consumption as assumed at revising the electricity rates. However, impacts of increased/decreased fuel consumption will not be reflected.
At the time of the fuel cost adjustment under the current electricity rate as revised in 2008, Fukushima Daiichi and Daini Nuclear Power Stations are assumed to run normal operations as planned. For this reason, we may not absorb the higher fuel cost this time, which has resulted from increased thermal power fuel consumption due to shutdown of Fukushima Daiichi and Daini Nuclear Power Stations this time.
Q.
Are you going to cover higher fuel cost exclusively with markup in the deregulated sector?
A.
Higher fuel cost has resulted from electricity supply to all of our customers, including our customers in the deregulated section. It is impossible to cover higher fuel cost exclusively with markup for our customers in deregulated section.
In the regulated section, we would like to file necessary applications for markup as soon as possible, paying due attentions to the drafting process of "Comprehensive Special Business Plan" and discussions at "Expert Panel to Review Electricity Rate System and Its Operation."
Q.
As for the markup this time, how are you going to rationalize your business operations?
A.
Immediately after the Great East Japan Earthquake, we started making fund-raising efforts by selling real estate and securities on hand and liquidating/reorganizing our affiliate firms. In addition, we are also planning the following cost-cutting programs on the group-wide scale.

  • Cutting down workers' salaries and director's remuneration
  • Reexamining welfare programs (abolishing all welfare facilities)
  • Reducing manpower (stopping employment of new company staff and soliciting for voluntary retirees)
  • Cutting down corporate pension benefits

  • Expanding competitive bidding
  • Cutting down overhead costs (stopping commercials and other advertisements, reexamining donations, commission fees, research expenses, etc.)
Q.
Is business rationalization-based cost reduction insufficient to avoid electricity rate hike?
A.
We are intensively working on rationalizing our business operations before asking you for the electricity rate hike this time. However, as fuel cost is rising further than that, we have no choice but to raise the electricity rates. We would be grateful if you understand it and cooperate with us.
Q.
Are you planning the markup this time to cover compensations for damage or reactor decommission/decontamination costs?
A.
The markup this time is not intended to cover compensations for damage or additional cost related with reactor decommission/decontamination of Fukushima Daiichi Nuclear Power Station.
Q.
Why are you planning the markup in the deregulated section at an earlier timing?
A.
Due to a sharp rise in fuel cost, our financial balance is unlikely to improve in the foreseeable future. Our financial balance is also deteriorating rapidly. If the current condition continues, we will face difficulty in fuel procurement in the near future and probably fail to provide stable electricity supply.
To improve our balance as mentioned earlier, we need to raise the electricity rates as soon as possible under intensified business rationalization. For this reason, we have decided to ask customers in the deregulated section for markup.
In the regulated section, we would like to file necessary applications for markup as soon as possible, paying due attentions to the drafting process of "Comprehensive Special Business Plan" and discussions at "Expert Panel for Reviewing Framework and Actual Operations of Electricity Rates."
Q.
When and how are you going to offer new electricity tariff for each customer contract category? What kind of procedures do we have to take from now on?
A.
TEPCO staff will visit you or send you related documents to make some explanations. From the early February 2012, we will send by mail the documents explaining the electricity rate hike for each customer category. We would be grateful if you check out these documents. If you have any question about explanations on these documents, they describe telephone information services exclusively in charge of answering your questions.

If you have any question, refer to TEPCO customer center.