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Business

Beleaguered Tepco on the offensive to pay for Fukushima cleanup

Fumio Sudo

TOKYO -- Tokyo Electric Power will go all-out to claim a share of the electricity retail market and use the revenue to cover snowballing expenses from the Fukushima Daiichi nuclear disaster, Chairman Fumio Sudo said in an interview Thursday with The Nikkei.

     Tepco Customer Service, a wholly owned subsidiary of the utility, registered Thursday as an independent power provider. It will sell electricity to businesses in the greater Osaka and Nagoya regions, setting its rates several percentage points lower than those of the areas' regional utilities. This would mark Tepco's first foray into markets outside its service area.

     "We want to propose cost reductions to businesses paying higher prices," Sudo said. "We would also like to launch a counterattack against rival electricity and gas companies moving into (the greater Tokyo region)."

     Tepco will also supply power to the regional offices of Tokyo-based companies operating across Japan. "We're thinking of companies such as volume retailers. We want to gather information and requests from customers to offer new services," Sudo said.

     The utility is looking to form a broad business partnership covering fuel procurement and fossil-fuel power generation to reduce its annual 3 trillion yen in fuel costs. It is accepting tie-up proposals from energy companies through the end of this month, with such companies as Chubu Electric Power, Osaka Gas, and Tokyo Gas expected to make an offer.

     "We can't succeed in a tie-up under a mindset of doing everything in-house," Sudo said. "If we can reduce fuel costs, it'll contribute to the Japanese economy."

     Tepco is expected to select a partner this year and set up a joint venture before the end of the fiscal year.

     The company's retail strategy and tie-up plans are premised on gas sector reform, an issue currently under discussion at the Ministry of Economy, Trade and Industry. Tepco's plans could stall if the government does not permit joint use of liquefied natural gas terminals or loosen regulations on gas pipelines.

     "It's necessary to build a fair environment so that major gas and power companies can compete under the same conditions," Sudo pointed out. He called for opening up gas pipelines to competitors, just like grid management will be severed from power generation operations under electricity sector reform.

     Under the new restructuring plan approved by the government in January, Tepco plans to cut costs by 4.8 trillion yen ($46.8 billion) over 10 years. "My sense is that it's 4.8 trillion yen and then some," Sudo stressed. "Our employees are fired up to see how much further we can go."

     The company's biggest challenge is compensation, cleanup and decommissioning in Fukushima.

     "I won't allow (employees) to not contribute to Fukushima's recovery or not go to Fukushima," Sudo said. He aims to revise the company's personnel system so that every employee will have a chance to work in Fukushima or get involved in recovery efforts.

     The Fukushima Daiichi cleanup has faced a string of setbacks, such as malfunction of equipment used to decontaminate radioactive water. "We are putting supervisors in each area and adding more surveillance cameras to make sure the work proceeds safely," Sudo said. "We'll also put GPS in each person's helmet to improve security."

(Nikkei)

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