TOKYO --Tokyo Electric Power Company (TEPCO) announced January 17 that an average markup of about 17% would be applied to the unregulated business division (corporations and other businesses with large power purchases) starting in April. Approximately 240,000 customers will be subject to this markup. Although the company intends to negotiate with each customer to ask for understanding on the markup, the negotiation will likely face difficulties. There is a major risk that TEPCO's customers will be taken away by power producers and suppliers (PPS) or other power suppliers.

Of the 17 nuclear power reactors operated by TEPCO, only two are currently in operation. Furthermore, these two units are scheduled to be shut down by March 2013 for inspection. Replacement of nuclear power with thermal power will results in a considerable rise in fuel costs for thermal power generation in 2012. Reduced costs from improved business efficiency will be subtracted from the fuel costs to make an adjustment to the current electricity rate. Compensation for the accident at the Fukushima I nuclear power station, reactor decommissioning costs, and expenses required for restoration of thermal power plants from the earthquake disaster will not be incorporated into the rate adjustment.

During a press conference, TEPCO President Toshio Nishizawa said, "We will continue to make efforts to rationalize and streamline our operations to the best we can, but we are facing harsh business conditions. This was a painful decision to make, and we found ourselves with no choice but to ask our customers to assent to our decision on the markup." The utility is also considering raising the rate for the regulated division including households as early as possible.