June 26 (Bloomberg) -- Tokyo Electric Power Co., forced to shut the world's biggest nuclear plant, may post a wider first- half loss than the utility had forecast as fuel costs soar.

``With the closure of our Kashiwazaki Kariwa nuclear plant, we're in the most difficult phase ever,'' Masataka Shimizu, who took over as the company's president today, said in an interview in Tokyo. ``We will be hard-pressed to achieve the earnings targets we've announced.''

Shimizu, 64, takes the helm at a time when Asia's largest utility is burning more oil, natural gas and coal at record prices to generate electricity after an earthquake damaged the atomic plant. Tokyo Electric, which in April forecast a 40 billion yen ($372 million) net loss for the six months to Sept. 30, may increase power prices in January, he said.

``The company is vulnerable to oil prices and has few counter-measures against the spikes,'' Shigeki Matsumoto, an analyst at Nomura Securities Co., said by phone. He has had a ``reduce'' rating on Tokyo Electric's shares since July 19.

Tokyo Electric's shares have slumped 33 percent since the July 16 temblor.

Shimizu replaces Tsunehisa Katsumata, who was elected chairman at today's annual shareholder meeting. Shimizu joined Tokyo Electric in April 1968 and spent most of his career as a purchaser of cables and power-plant equipment.

Crude oil prices in New York almost doubled in a year and touched a record $139.89 a barrel on June 16. Power-station coal at Australia's Newcastle port, a benchmark for Asia, rose to an all-time high for a fourth week on June 22, to $162.66 a metric ton, according to the globalCOAL NEWC Index.

Costs Balloon

If oil prices stay at current levels, the company's spending on all types of fuels for the full year may soar to a record 2 trillion yen, Shimizu said. The fuel bill for the year ended March 31 was 1.76 trillion yen, 65 percent higher than the previous year.

The output of Tokyo Electric's nuclear power plants accounted for 23 percent of total generation in the year ended March 31, 38 percent less than a year earlier.

Tokyo Electric posted its first loss in 28 years in the 12 months ended March 31 because of the closure of the atomic station, which accounts for about 10 percent of the company's total generation capacity.

The magnitude-6.8 quake that struck Niigata prefecture in northern Japan was bigger than assumed in the plant's design, and safety concerns linger even after the International Atomic Energy Agency in February said it found ``no significant damage.'' The temblor sparked a fire and caused radiation leaks, prompting the trade ministry to order it to be shut indefinitely.

Price Increase

``At this moment, we can't predict when we can resume operations at the plant,'' Shimizu said. ``Restoring confidence and gaining understanding from locals is most important.''

The company needs approval from the trade ministry and local authorities before a restart. Tokyo Electric on June 16 started installing braces and supports for pipelines and ducts to improve quake resistance.

The loss for the full year may widen to 414 billion yen from 150 billion yen in the previous period, according to a forecast by Tatsuya Tsunoda, a senior analyst at Mizuho Securities Co. Nomura's Matsumoto predicts a 110 billion yen loss. Both analysts' forecasts are based on the assumption that the Kashiwazaki Kariwa station will remain shut through the year.

Tokyo Electric in April refrained from issuing a full-year forecast, citing uncertainty about when it could restart the nuclear station.

To offset higher oil prices, Tokyo Electric said today it will introduce a new pricing system in September to better reflect fuel costs.

``We can't avoid increases in the fuel costs, and how much more we'll incur depends on the nuclear utilization rate,'' Shimizu said. ``Oil prices surge too fast and are too high. They weigh heavily on us.''

To contact the reporters on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net; Michio Nakayama in Tokyo at mnakayama4@bloomberg.net.

Last Updated: June 26, 2008 07:01 EDT