Tokyo Electric to Accept Japan Call to Review Planned Rate Hike

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By Shigeru Sato and Michio Nakayama

Oct. 17 (Bloomberg) -- Tokyo Electric Power Co., Japan's largest utility, will review its proposed 12 percent increase in rates from January at the request of the government amid concern over rising costs for households, a company official said.

The utility has decided to meet the request made yesterday by the trade ministry to reconsider the proposed tariff increase, a company official with the knowledge of the matter said on condition of anonymity because the decision hasn't been announced.

Tokyo Electric President Masataka Shimizu said in July the company may increase the average monthly household electricity bill in January by about 800 yen ($7.87) as record oil prices bolstered its fuel procurement costs. Japanese utilities typically review their rates on a quarterly basis to reflect changes in prices of crude and liquefied natural gas.



Tokyo Electric hasn't decided upon on any measures to meet the request and is holding internal talks, the official said. Crude oil has fallen more than 50 percent from a record $147.27 a barrel on July 11 to trade at $72.40 at 11:43 a.m. in Tokyo today.

The Ministry of Economy, Trade and Industry called on Tokyo Electric in a letter yesterday to avoid a steep increase in electricity charges, the Tokyo Electric official said.

The government is seeking measures to ease the financial burden on households, given the surge in crude prices in the first seven months of the year and the global financial turmoil has cut household spending in the world's second-largest economy.

An average household in Tokyo area currently pays 6,797 yen a month for electricity, according to Tokyo Electric. The company defines an average household as a family with four members, using 290 kilowatt-hours of power a month.

Utilities typically revise rates for the January-to-March quarter to reflect changes in oil and LNG import costs in the July and September quarters of the previous year. Tokyo Electric's proposed increase was based on assumption the U.S. dollar traded at 105 yen in the quarter ended Sept. 30 and oil import costs might average $130 a barrel.

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Michio Nakayama in Tokyo at mnakayama4@bloomberg.net;

Last Updated: October 16, 2008 23:23 EDT