June 26, 2008

Tokyo Electric Power Mulling Overhauling Rate Structure

Tokyo, June 26 (Jiji Press)--Tokyo Electric Power Co. is mulling overhauling its electricity rate structure to adequately reflect surging fuel costs traced to higher crude oil prices, a move that may lead to a steep rate hike from October, informed sources said Thursday.

Japanese power suppliers set their electricity rates based on two calculation formats--one that is designed to automatically reflect fuel price fluctuations every three months and the other that fully incorporates various factors.

Tokyo Electric Power is expected to consider raising its electricity rates by reviewing its guidelines for setting rates to reflect higher fuel costs under the full-fledged calculation format, since its rate hikes have already reached their limits under the quarterly fuel cost adjustment format, the sources said.

The company will fix details about the expected electricity rate hike from October by taking into account crude oil prices in the period to the end of June and other factors, according to the sources.

Tokyo Electric Power is also mulling passing growing costs for thermal power generation on to its electricity rates, the source said.

Costs for the company's thermal power generation are increasing following the shutdown of its flagship Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture, central Japan, that was damaged by a strong earthquake in July 2007.

For the period until September, the company plans to forgo an electricity rate hike as it is taking such steps as cuts in personnel costs, the sources said.END

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