Oct. 31 (Bloomberg) -- Tokyo Electric Power Co., forced to shut the world's biggest nuclear plant after an earthquake, predicted its first loss in 28 years to pay for repairs and a switch to costlier oil and gas-fired generation.

``I expect next year to get tougher if oil prices stay at current levels,'' President Tsunehisa Katsumata told reporters in Tokyo today. He will accept a 20 percent pay cut starting November to take responsibility for the expected loss.

Fuel costs may be 38 percent higher than the utility's July estimate and Tokyo Electric will spend 164 billion yen ($1.43 billion) to repair the Kashiwazaki Kariwa station, which has been shut indefinitely. The company's shares have dropped 23 percent since the July 16 earthquake, on concern that record crude oil prices will erode profit.

Japan's largest power producer expects a net loss of 95 billion yen for the year ending March 31, compared with profit of 298 billion yen a year earlier, Tokyo Electric said in a statement today. In July it had forecast net income of 65 billion yen. The loss would be the company's first since the year ended March 1980, spokesman Daiki Ohashi said.

``Fuel cost is the factor that will cut Tokyo Electric's profit,'' said Tatsuya Tsunoda, an energy analyst at Mizuho Securities Co.

For the six months ended Sept. 30, the company's profit declined to 21.2 billion yen, from 178 billion yen a year earlier, according to the statement. In July, Tokyo Electric had projected a net income of 130 billion yen for the period. Sales rose to 2.67 trillion yen from 2.60 trillion yen a year ago.

Dividend Cut

Tokyo Electric it will cut its planned dividend to 65 yen a share from 70 yen. The utility last year raised the annual dividend for the first time in seven years, up from 60 yen.

The cut ``isn't good for the company's shares as investors buy them to enjoy the dividend,'' Teruhisa Ishikawa, a manager at Mizuho Investors Securities Co. said.

Tokyo Electric's shares rose 1.7 percent to close at 2,920 yen on the Tokyo Stock Exchange. The earnings were released after the 3 p.m. market close. They have declined 14 percent in the past year, compared with a 6 percent fall in Kansai Electric Power Co., Japan's second-biggest utility.

The company said 48 executives, including Katsumata and Chairman Shigemi Tamura, will have their pay cut. This is the second time this year that Tokyo Electric has lowered compensation. In March, 16 executives faced cuts after the utility admitted to hiding accidents and fabricating safety records at its nuclear stations.

Fuel Costs

The utility said fuel costs may climb to 440 billion yen this year from 320 billion yen it estimated in July. The company raised its average crude oil price forecast for the year to $72 a barrel from $68 predicted in July, and left its exchange rate estimate at 120 yen to the U.S. dollar.

Dubai oil, a benchmark for Japan delivery prices, climbed to a record $84.16 a barrel on Oct. 30, up 45 percent from a year ago. The yen traded at 115.16 against the dollar at 6:42 p.m. in Tokyo.

Crude oil futures in New York reached a record $93.80 a barrel on Oct. 29. The December contract traded at $89.63 at 9:41 a.m. London time.

The July earthquake, which was measured at magnitude 6.8 by Japan's Meteorological agency, caused about 2,947 ``improper incidents'' at the facility, according to the company's surveys so far. The plant will be shut until the trade ministry and local governments approve its restart.

Inspection, Repairs

Inspecting and repairing the plant will result in a one- time loss of 175 billion yen, the company said. The utility didn't include the repair cost in the earnings forecast it announced on July 31, when it cut full-year profit estimate by 79 percent.

Following the shutdown of the Kashiwazaki Kariwa station, Tokyo Electric has restarted two of its decommissioned thermal power plants and plans to restart five others to make up for the supply shortfall. The seven reactors at the nuclear facility have the capacity to generate 8,212 megawatts, or about 10 percent of the utility's total supply.

Consumption of crude and fuel oil will be more than 10 million kiloliters, double the average, for this year, Katsumata said on Oct. 19. The utility operated its thermal plants beyond their designed capacity to meet summer demand.

This summer, Tokyo Electric asked its customers to cut power usage for the first time in 17 years to help avoid a shortage. Demand soared as temperatures rose to record levels in some parts of Tokyo and neighboring regions. Electricity demand peaks in the summer season, typically from July to September, as consumers turn on air conditioners.

The utility predicted full-year sales of 5.47 trillion yen, higher than its July estimate of 5.45 trillion yen.

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

Last Updated: October 31, 2007 08:50 EDT