Photo/Illutration Kojiro Higuchi, president of Tohoku Electric Power Co., speaks at a news conference in Sendai on Nov. 24. (Ryo Ikeda)

Tohoku Electric Power Co. on Nov. 24 applied for government approval to increase its “regulated electricity rate” for households by 32.94 percent on average starting in April.

This is the first time a Japanese utility has sought permission to raise its regulated rate since Russia’s invasion of Ukraine in February fueled the surge in fuel costs.

Tokyo Electric Power Co., Hokuriku Electric Power Co., Chugoku Electric Power Co., Shikoku Electric Power Co. and Okinawa Electric Power Co. are expected to follow suit. They have already said they plan to raise their electricity prices next April.

The last time Japanese power companies sought to increase their regulated rates was between 2012 and 2015.

The utilities at that time had posted significant losses due to the suspension of nuclear power plants following the Fukushima nuclear disaster triggered by the Great East Japan Earthquake and tsunami in March 2011.

Tohoku Electric’s rate increase would affect 5.28 million households in northeastern Japan, which account for 77 percent of the contracts held by the company.

For an average household that uses 260 kilowatt-hours (kWh) of electricity every month, the monthly bill will increase by 2,717 yen ($20) to 11,282 yen.

That will be a much larger price hike than the one in September 2013, when the company raised its rate by an average of 8.94 percent.

Tohoku Electric says the next planned increase takes into account the costs for fuel and personnel, as well as the company’s profitability.

Tohoku Electric President Kojiro Higuchi said at a news conference in Sendai on Nov. 24 that the company’s performance has sharply declined because of soaring fuel prices brought by the Ukrainian crisis and the weaker yen.

“If we don’t do anything, we will be unable to make sufficient investments to renew or repair our electricity-generating facilities,” he said. “A stable electricity supply could be at risk.”

The industry ministry will assess whether the company has taken sufficient measures, such as cutting personnel costs, to justify the proposed rate increase.

The rate increase could be smaller depending on the results of the assessment.

Major utilities charge two different rates for electricity: a “regulated rate” that requires approval from the government, and a “free rate” that the companies can set at their own discretion.

Tohoku Electric Power also said on Nov. 24 that it will raise its “free rate” by 3 percent to 21 percent in April next year.

If the rate hikes are combined with higher fees from December that the company had already announced, electricity bills will rise by 32 percent to 40 percent.

Other utilities are also struggling with the higher fuel costs.

“We assume that (average households) will see their monthly electricity bills rising by 2,000 yen to 3,000 yen next spring,” industry minister Yasutoshi Nishimura has said.

The government has decided to provide grants to power companies to lower electricity bills by around 20 percent.

It allocated 2.487 trillion yen for this policy in the draft of the second supplementary budget for fiscal 2022.

(This article was written by Junichi Miyagawa and Ryo Ikeda.)

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