Tokyo Electric Forecasts Second Year of Loss on Fuel

By Megumi Yamanaka

July 28 (Bloomberg) -- Tokyo Electric Power Co., Asia's biggest utility, forecast a second year of losses as the shutdown of the world's largest nuclear plant forces it to burn costlier oil and gas.

The company forecast a net loss of 280 billion yen ($2.6 billion) for the year ending March 31, compared with a 150 billion yen loss a year earlier, it said in a statement to the Tokyo Stock Exchange today. It posted a first-quarter loss of 76.2 billion yen as sales rose 6 percent to 1.32 trillion yen.

Tokyo Electric's shares have slumped 26 percent since last year's July 16 temblor as it increased thermal generation following the indefinite closure of the Kashiwazaki Kariwa nuclear plant. Last year the utility posted its first loss in almost three decades and may increase electricity prices to cover crude oil costs that have gained 61 percent in a year.

``Fuel costs are weighing on the company's earnings,'' Hirofumi Kawachi, a senior energy analyst at Mizuho Investors Securities Co. said before the announcement. ``Oil surged to more than expected levels.''

Tokyo Electric may increase power rates from January should oil prices remain high, President Masataka Shimizu said on June 26. In April the utility estimated the price of oil delivered to Japan would average $100 a barrel for the six months ending Sept. 30. That's below the average $120.29 a barrel paid for benchmark Dubai crude this year.

Additional Capacity

The company's shares rose 0.5 percent to close at 2,815 in Tokyo today after sinking to a two-year low of 2,485 yen on May 29.

Tokyo Electric has added 2.5 million kilowatts of generation capacity since the disaster by restarting mothballed thermal plants and bringing forward the commissioning of new gas-fired generators, Vice President Takashi Fujimoto said July 3.

The company restarted three older plants this year, including the Yokosuka No. 7 oil-fired unit, commissioned in 1968, and the No. 8, started in 1970. The utility supplies more than 28 million customers in Tokyo and eight surrounding prefectures.

To contact the reporters on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.