Tokyo Electric Power Co. Holdings Inc.

The negative outlook reflects our view that there is at least a one-in-three chance that the group's ability to generate profit will not recover to levels commensurate with the ratings. This is because fierce competition in the electricity retail market puts heavy pressure on the group's profit. Also, we are uncertain about whether it can swiftly restart its Kashiwazaki-Kariwa nuclear plant to substantially recover its profit. We will consider a downgrade if we see a heightened likelihood of any of the following scenarios: The group's recurring profit being markedly below ¥200 billion in fiscal 2022 and remaining so in fiscal 2023 because of a continuous deficit in its electricity retail sales business; The group's funding becoming unstable because it is

...Tokyo Electric Power Co. Holdings Inc.'s (Tepco Holdings) earnings environment will remain harsh, in our view. The Tepco Holdings group's consolidated recurring profit tumbled to about Ñ45 billion in fiscal 2021 (ended March 31, 2022) from about Ñ190 billion the previous year. Intense competition led to a deep recurring loss of Ñ66.4 billion in its retail segment, down from a Ñ6.4 billion profit the previous year. As of December 2021, new market entrants handled a larger proportion of business in Tepco Holdings' operating area than in any other part of Japan. In the area in which Tepco Holdings operates, new market entrants handled 30.4% of business, compared with a nationwide average of 21.7%. Although the national electricity pricing system allows the utility to pass on a certain proportion of heightened costs to customers, a weakened yen and high prices for fuel, such as liquefied natural gas and coal, as well as soaring wholesale prices may somewhat hurt its performance in the next...

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