Tepco to Sell Electricity Beyond Tokyo Area Amid Reforms

Tokyo Electric Power Co. (9501) is striking out beyond its traditional service area for the first time with a deal to power branches of two of Japan’s biggest consumer electronics chains on its rivals’ turf.

The provision of electricity to branches of Yamada Denki Co. (9831) and K’s Holdings Corp. (8282) in the central Chubu region and western Kansai region is part of a strategy by Tokyo Electric to use nationwide sales to help it recover from the 2011 disaster at its Fukushima atomic plant, spokeswoman Mayumi Yoshida and spokesman Hiroshi Itagaki said today by phone.

The move by Tepco, as Japan’s biggest utility is known, comes as the government pushes a plan to break up the regional power monopolies with the aim of lowering prices.

The company registered its Tepco Customer Service Corp. subsidiary in May to market electricity outside Japan’s eastern Kanto region, which includes Tokyo.

“This will be our first supply of electricity outside the Kanto area,” Yoshida said.

Tepco has agreed to sell 62 Yamada Denki stores in Chubu and Kansai about 19,000 kilowatts starting Oct. 1, or about 50 million kilowatt hours of annual use, Yoshida said. She declined to estimate how much Tepco would earn from sales to the electronics chain. The utility will provide electricity to K’s Holdings’ 20 shops in Kansai, said Itagaki.

The company is targeting 34 billion yen ($327 million) in annual sales from outside the Kanto region in three years and 170 billion yen annually in sales in 10 years, Yoshida said.

Tepco Contract

Yamada Denki will save money through the Tepco contract and anticipates broadening its service agreement in the future, the company said in a faxed response to questions.

Tepco plans to buy excess electricity from independent generators in the Kansai and Chubu areas and resell it to Yamada Denki, Yoshida said. That region is primarily served by Kansai Electric Power Co. and Chubu Electric Power Co.

The government passed the first legislation to enact the changes last year by setting up an independent body to coordinate supply and demand across the nation’s electricity grids. Parliament then voted in June to approve a law opening the market to new entrants by 2016.

To contact the reporters on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net; Emi Urabe in Tokyo at eurabe@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Iain Wilson

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