Tepco Posts Return to Profit Higher Electricity Rates

Tokyo Electric Power Co. (9501), operator of the wrecked Fukushima Dai-Ichi nuclear power station, returned to profit in the first nine months of its fiscal year after raising customers’ electricity rates and cutting costs.

Operating profit was 231.3 billion yen ($2.25 billion) in the nine months ended Dec. 31, compared with an operating loss of 114.5 billion yen a year earlier, according to a statement today from the company known as Tepco.

The return to profit was led by increased revenues after the utility, which serves 29 million customers in the Tokyo metropolitan area, raised electricity rates for households by 8.5 percent in September 2012. The increase boosted electricity sales by 9.9 percent to 4.3 trillion yen.

Net income was 772.9 billion yen after a government injection into the utility’s fund for payouts to people and companies affected by the Fukushima disaster in March 2011.

Tepco’s operating profit target for the year ending March is 134 billion yen, compared with an operating loss of 222 billion yen the previous year.

Tepco cut staff and deferred repair work to keep expenses from ballooning, despite increased fossil fuel purchases to make up for lost nuclear capacity amid a depreciating Japanese currency, the utility said. Ordinary expenses rose 1.9 percent to 4.67 trillion yen, compared with a 12.3 percent increase the previous year.

Recovery Plan

The company expects to pay a record 2.9 trillion yen for fuel in the current fiscal year, during which all of its nuclear reactors were offline for safety checks after the Fukushima disaster, up from 2.7 trillion yen a year ago, Managing Executive Officer Katsuyuki Sumiyoshi said today at a press conference.

Tepco on Jan. 15 won support from the government and its biggest lenders for a business recovery plan after the nuclear disaster three years ago almost destroyed the company. The plan hinges on the restart of two reactors in July at the Kashiwazaki-Kariwa nuclear plant, the world’s biggest, in an effort to reduce its dependence on fossil fuels.

It also includes more than 1 trillion yen in additional cost cuts by the utility that is now under government control. These include slashing fuel costs by 650 billion yen a year and setting up a joint venture with other utilities to purchase as much as 40 million metric tons of liquefied natural gas a year.

Job Cuts

The utility will cut 2,000 jobs as part of its cost reductions and will shift to a holding company structure by 2016.

Kansai Electric Power Co., Japan’s second-biggest utility, forecast a net loss of 98 billion yen for the full year ending March 31, compared with a loss of 243.4 billion yen the previous year. Kansai Electric attributed the improved performance to a rate increase implemented in May.

The utility’s net loss was 34.7 billion yen during the nine-month period, compared with a loss of 152 billion yen a year earlier.

The following table shows the reported net loss or net income at Japan’s nine nuclear plant operators for the nine months ended Dec. 31, 2013 and Dec. 31, 2012 and their forecasts for this financial year. Figures are in billions of yen.

                      1Q-3Q FY13     1Q-3Q FY12     FY Forecast
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Hokkaido Electric     -31.396         -90.892        -77.000
Tohoku Electric        13.108         -56.188         15.000
*Tokyo Electric       772.898          -2.221        661.000
Chubu Electric        -31.580          -2.287        -75.000
Hokuriku Electric       4.997           9.100        Not given
Kansai Electric       -34.652        -151.973        -98.000
Chugoku Electric      -13.269         -13.660        -15.000
Shikoku Electric       -4.695         -30.973        Not given
Kyushu Electric       -59.009        -234.735       -125.000

*Tokyo Electric’s 9-month operating profit was 231.331 billion
yen compared with an operating loss of 114.456 billion yen in
the same period a year ago.
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To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net; Jacob Adelman in Tokyo at jadelman1@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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