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Comments in Response to the Asahi Newspaper Front Page Article "Power Companies gains 70% of Its Profit from the Regulated Section Including Ordinary Households" (May 23)

May 23, 2012
Tokyo Electric Power Company

On May 23, the Asahi Newspaper, the front page, and the Yomiuri Newspaper, page 2 and 10, said "TEPCO gains 90% of its profit from the regulated section including ordinary households." The facts are provided below.

The electricity rates for the regulated and deregulated sections are appropriately calculated based on the cost allocation rules specified by an Ordinance of the Ministry of Economy, Trade and Industry (The electricity rate calculation rules stipulated in the General Supply Provisions of General Electricity Utility).

As our income from each of the sections in the last several years show a tendency that a substantial portion of income came from the regulated section, there has been skepticism about cost allocation validity. However, the following factors have contributed to the gap of profit margins between these sections.

With all units at Kashiwazaki Kariwa Nuclear Power Station shutdown due to the Niigata-Chuetsu-Oki Earthquake and the unprecedented increase of fuel cost, which led to the increase of fuel cost for our thermal power plants, the income of the deregulated section has been squeezed where the fuel cost proportion is relatively high. On the contrary, the expenditure of the regulated section (where the fixed cost proportion is relatively high) has been mitigated as a result of cutting down the fixed cost (investments, repair costs and other expenses) to improve our financial standing.

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