TEPCO chief vows cost cuts after utility posts Y288.4 bil loss

You know what they say, "a billion here, a billion there....pretty soon it adds up to real money" True in any currency. I wonder just how cost in effective that higher tsunami wall looks about now....

BTW, Mr. President Start by selling all your non-electricity producing/transmitting assets immediately. The hosipital, the employee retreat (if you have one), the extra land, the golf club memberships. Sell it all.

Next, while we cannot ask you to starve (wish we could!) Senior management needs to have their pay cut by more than the regular manager's 30% and your bonuses need to go to zero until all public funds have been repaid with interest. Please don't give me the line about how you have to pay higher wages to avoid brain drain and to attract new talent. You and your company are, pardon the pun, "Radio Active." Your existing management structure has no other employment opportunities, and if I were a new grad, I would rate a position with your company just below that of night manager at the Shibuya McDonalds. Nope, you guys are it for a while. You are stuck w/us and we/you.

So, just to wrap up, sell everything that does not make or transport (or repair!) electricity, cut all management costs to the bone (then start to harvest the marrow). Before you do these, I would consider it "unwise" of you to come back for yet another rate hike.

Just a thought.

They'll have a meeting. Suck air through their teeth and then rename the company (at huge expense) and keep on doing the same old.

While we truly appreciate it, we are sorry that we had had to ask the public to carry the burden, TEPCO President Naomi Hirose told a press briefing in Tokyo on Wednesday.

Not nearly as sorry as the public who have to pay for your "man made errors" - and what happened to the extra 10% you've been overcharging us for the last ten years ?

@Alan

Didn't see your post but I do know the moderators are extremely draconian...

start with pensions and salaries.

I"ll bet his and his cronies' salaries and bonuses are sacred.

I'll bet bribes to political parties are also sacred.

TEPCO ought to by euthanized. A non-profit public utility ought to be put in its place.

"Effectively nationalized" in fact only means that this private capitalist entity is a parasite living off public funds.

Agree with Zichi. The board of directors ought to be doing time.

Away with TEPCO and no compensation for its owners.

So they got JPY 1 trillion, and lost almost JPY 300 billion, in just three months. Do the math. They'll be back begging for more public funds in a matter of months. Glad its not my tax money they are p*ssing away.

FightingVikingAug. 02, 2012 - 08:58AM JST

Not nearly as sorry as the public who have to pay for your "man made errors" - and what happened to the extra 10% you've been overcharging us for the last ten years ?

What 10%? Fuel costs in Japan are among the highest in the world for power generation, as EVERYTHING has to come in by ship. In fact, other than coal and nuclear, everything costs far more to produce than they charge. That's why removing nuclear base power raises fuel costs by 50% even though nuclear only provided about 30% before.

First Siemens and now the CEO of GE says nuclear energy has no business future. These two nuclear industry players have internalized the externalities and with sweet government subsidies looking harder to come by, they realize the bottom line is drawn in red ink. The only way to cut costs in this industry is to eliminate it.

basroil

What 10%? Fuel costs in Japan are among the highest in the world for power generation, as EVERYTHING has to come in by ship. In fact, other than coal and nuclear, everything costs far more to produce than they charge.

Then why are all utilities except for TEPCO lowering their price of electricity?

http://www.yomiuri.co.jp/atmoney/news/20120730-OYT1T01241.htm

It will be fine, they have experience. Safety cost cutting "nothing was sacred" there, so I do believe and trust that when it comes to people's lives nothing was sacred. Really is baffling that people don't understand that with TEPCO nothing is sacred.

Graham DeShazoAug. 02, 2012 - 07:46AM JST

So, just to wrap up, sell everything that does not make or transport (or repair!) electricity, cut all management costs to the bone (then start to harvest the marrow). Before you do these, I would consider it "unwise" of you to come back for yet another rate hike.

So, they should sell their excavation equipment used to fix the sites. They should sell the water purification systems at all their thermal plants. They should sell their co-generation equipment. They should sell their stake in fuel oil transportation and refinement. They should sell their stake in fuel mining operations.

In fact, their only profitable division is usually the petroleum byproducts one. http://www.tepco.co.jp/en/corpinfo/ir/tool/annual/pdf/2012/ar201208-e.pdf shows a list of companies that TEPCO owns or partially owns.

Clearly that statement was made without actually considering the implications. Nearly all of the expenditures for TEPCO are fuel based, in fact, fuel costs are LARGER than nuclear payouts. http://www.tepco.co.jp/en/corpinfo/ir/tool/factbook/pdf/p11-e.pdf shows up to 2011, and 54% higher than 2011 brings us to 3.5 trillion yen in fuel costs, which is triple of what the 2009 costs were. Clearly TEPCO will post losses simply on this extra cost without extra income to compensate.

Thomas AndersonAug. 02, 2012 - 11:52AM JST

http://www.tepco.co.jp/en/corpinfo/ir/tool/factbook/pdf/p11-e.pdf will explain to you why. 54% above 2011 levels is 3.5 trillion, which is more than the sales of any other company including Chubu and KEPCO. They are far more susceptible to increased prices as they lack large hydro sources.

zichiAug. 02, 2012 - 10:07AM JST

In the end it'll take more than 50 years and more than ¥50 trillion of taxpayer money to try and make their deadly atomic plant safe, if it's possible?

At this rate, NOT using nuclear will cost twice that. TEPCO currently spends 2 trillion yen/year more than it did in 2010 (even with much higher demand in 2010), so in 50 years it will cost 100 trillion yen not to use nuclear. Your suggestions make no financial sense, based on TEPCO alone. Add all the other companies that have nuclear and suddenly you have very large financial losses that far outweigh even the most apocalyptic figures you give.

It says "the cost of supplying coal and oil has slumped".

Japan is not the only island nation dependent on energy imports, other nations also have to ride with international fluctuations. But as they don't spend so much on N-R&D or the clean up costs, nor subsidize an Industry on the scale Japan does, it's not such a disaster for them to import. Can't spill milk and complain about the price of kitchen towels?

Thomas AndersonAug. 02, 2012 - 12:10PM JST

It says "the cost of supplying coal and oil has slumped".

Decrease, not slump. If you buy 100 kg of fuel for 100 yen each one year, and then 150 kg fuel at 80 yen each the next, you still spend a lot more even if prices decrease significantly.

zichi Aug. 02, 2012 - 12:24PM JST

America wants to sell LNG to Japan at a price lower than it's currently paying. America would benefit from Japan not using or cutting back on nuclear energy. But it will require the building of port terminals to cool the gas for transport. It also wants to sell coal to Japan.

Some experts have predicted renewable energy will be cheaper than nuclear energy within 20 years.

1) USA has no gas to sell, it's all on the east coast and no cross country pipeline. LNG is generally used only in turbines, where it gets a fairly good 10yen/kWh or so, but those can only be used for peak power. In boiler form, gas becomes much less efficient, and becomes twice as expensive as nuclear even with the 8 yen/kWh level. Coal is very harmful, it will increase healthcare costs for the nation (and cause a thousand times as many deaths as nuclear per TWh produced), and isn't actually cheap to use. With CCS, fine particulate filters, advanced cleaning, fluidized bed, fly-ash processing, etc, coal's price shoots up past even boiler gas.

2) 20 years without nuclear means 40 trillion yen, plus of course making the alternative power plants, which even at the same price per kWh as nuclear (about 50yen/W installed) would be about 8 trillion yen. Still back at the same result that there's no financial reason not to go with nuclear. Even more if you take into account the amount of time that is needed to get renewables started or the cost of spreading it out.

The firm’s chief added that: “We will continue to do whatever we can to reduce costs. We are reviewing everything, and nothing is sacred.”

What a lie. If nothing is sacred and you'll be doing everything possible to reduce costs then you won't be giving bonuses to staff, and you'll be heavily reducing management level salaries then?

“While we truly appreciate it, we are sorry that we had had to ask the public to carry the burden,” TEPCO President Naomi Hirose told a press briefing in Tokyo on Wednesday.

No, we're paying for your incompetence. You got 1 trillion of our taxes, AND we have to pay more money for electricity.

However, there are plans to return the utility to “a purely private company in course of time,” industry minister Yukio Edano said Tuesday.

Stupidity.

The company’s president on Tuesday said TEPCO had won a “last chance” to transform itself into a “New TEPCO”

Paid for by us. Shouldn't the taxpayers have more of a say in this matter????

Basroil, 25% of all energy produced by coal, natural gas and uranium is used to get out of the ground and into your house.

As for TEPCO, it is just another poorly managed large scale Japanese company. The only difference with TEPCO is, they have the J-Gov and the Japanese people to bail them out. This is the irony of their plight: They asked everybody to conserve electricity last year do to a shortage of supply, which people did, but it put a huge dent in the company's revenue thus creating this huge financial loss. Now, they are increasing prices and accepting huge amounts of public funds for what? So the rest of the country can pay for their ignorance? These fools are nothing but white-collar crims and they are getting away with it.

@zichi

Well said. I gave a few of your comments the "thumbs up". I think some are giving you "thumbs down" since you have soundly defeated their arguments and they are angry...

zichiAug. 02, 2012 - 12:51PM JST

when calculating the cost of power from nuclear energy we also need to add the billions paid every year to those prefectures with atomic plants. Also the ¥500 billion given every year to the nuclear village for R&D. And the subsidies given for building the atomic plants.

What does this have to do with TEPCO's losses due to high energy prices? Nothing, since you have never even stated TEPCO even receives any of that money.

I used to enjoy debating with you, as I learned much back then. However, your recent comments are the same canned response about the nuclear village and 500 billion yen that don't even belong in this and other discussion threads.

DisillusionedAug. 02, 2012 - 01:12PM JST

25% of all energy produced by coal, natural gas and uranium is used to get out of the ground and into your house.

You mean to say produced by all sources. Fuel costs for oil are highest since ships use oil for transport fuel, and lowest for uranium due to power density. In the case of solar, energy cost associated with every watt capability produced is still several times higher than what you get out of it. In fact, one estimate put it at 15 year break even point (energy put into production vs energy produced), so for the average home that would mean 100% of all energy by solar is used to get out of the ground and into your house.

This is one of the reasons why major energy production companies must rely on things like fossil fuels, nuclear, and hydro. Those are relatively low input to production power ratio sources. Coal and nuclear in particular are very good, but nearly half of the production capability for TEPCO is oil, which is far less efficient and thus very expensive.

I am wondering how TEPCO can still be called a "giant utility".

Giant bankrupt trash seems more appropriate to me.

Wondering how much of that one trillion will go toward summer bonuses. Perfect timing to as for taxpayer's money.