As Japan pushes power deregulation, Tepco moves in on rivals' turf

TOKYO Wed Aug 27, 2014 1:16am EDT

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TOKYO Aug 27 (Reuters) - Tokyo Electric Power Co said on Wednesday it would start supplying power to customers in areas controlled by other regional monopolies, as a shake-up in Japan's electricity industry since the Fukushima disaster gathers pace.

The utility known as Tepco, which came close to collapse after the meltdowns at its Fukushima Daiichi nuclear plant in March 2011, is fighting back after rival utilities started moving in on its own turf.

Japan's government is pushing through reforms to boost competition and reduce the highest electricity rates in the industrialised world after the meltdowns exposed flaws in the national grid and pushed up prices.

Tepco said it would sell power to stores owned by Yamada Denki Co, Japan's biggest consumer electronics retailer by sales, in areas traditionally controlled by Chubu Electric Power Co, which a year ago bought an independent Tokyo-based electricity supplier.

The company will also supply Yamada Denki stores in areas controlled by Kansai Electric Power Co, a Tepco spokesman said.

Yamada Denki has previously bought its power mainly from Chubu Electric and Kansai Electric, according to the Nikkei business daily, which first reported the development.

Tepco is offering lower rates, the Nikkei said, adding it was in talks with other potential customers outside its traditional area.

FUKUSHIMA WOES

Japan's biggest utility was taken over by the government in 2012 and is paying billions of dollars in compensation through a taxpayer-funded programme to those affected by the disaster, which has led to the shutdown of all reactors in Japan.

Tepco was widely criticised for an inept response to the disaster and for cover-ups on nuclear safety before it.

On Tuesday it was ordered by a court to pay almost $500,000 in compensation to the family of a woman who committed suicide after the disaster, a possible precedent for further claims against the company.

Tepco, Kansai Electric and Chubu Electric are Japan's biggest utilities and operate in the country's main economic centres of greater Tokyo, Osaka and Nagoya respectively.

The regional monopolies, set up in 1951 during the American occupation after World War Two, followed the U.S. model at the time, with utilities controlling all aspects of power generation and transmission in designated areas.

The government plans to open up regional grids to all participants by next year and will fully liberalise prices for residential customers after that. Later it will split the utilities up into generation and transmission companies.

Tepco has lost 13,190 large customers since the beginning of April last year, a Reuters survey found last week.

It said in May it was aiming for 34 billion yen ($327 million) in annual sales outside its traditional service area within three years and 170 billion yen within 10 years. It had electricity sales revenue of 5.9 trillion yen in the business year that ended in March.

The utility plans to sell 10 billion kilowatt-hours of power a year outside its area within a decade, nearly 4 percent of its current power sales. (1 US dollar = 104.0400 Japanese yen) (Reporting by Kentaro Hamada; Additional reporting by Irene Wang and James Topham; Writing by Aaron Sheldrick; Editing by Alan Raybould)

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