Tokyo Electric Power Co. Holdings Inc.

Overview Key strengths Key risks Leading position in greater Tokyo's electricity market, accounting for roughly a third of national electricity sales Exposure to large contingent liabilities related to the disaster at the Fukushima No. 1 nuclear power plant and off-balance sheet liabilities Stable profit from power transmission and distribution thanks to continued benefits from monopoly under existing regulations Strong pressure on earnings and cash flow due to fiercely competitive retail electricity market Government approval of price increase set to help stabilize profit despite fuel prices remaining volatile Low likelihood of a material improvement in stable electricity supply and profitability amid uncertainty over the restart of the Kashiwazaki-Kariwa plant and continuing costs related to the Fukushima plant accident Maintained quasi-vertically integrated

...Tokyo Electric Power Co. Holdings Inc.'s (Tepco Holdings) earnings environment will remain harsh, though profit will likely pick up in the next one to two years. The group's consolidated recurring loss in fiscal 2022 (ended March 31, 2023) was Ñ285 billion, compared with recurring profit of Ñ42.2 billion in fiscal 2021. The loss comes after failure to fully pass on increased fuel and wholesale electricity prices to customers in its retail business. We believe a recovery in performance in the next one to two years is growing more likely because electricity prices are set to rise. This includes an increase in regulated rates from June 2023. However, prospects of the resumption of operations at the Kashiwazaki-Kariwa nuclear power plant remain unclear. In fiscal 2022, competition eased amid soaring wholesale prices, on which new market entrants depend much of their procurement. We believe the competition with Tokyo Gas, ENEOS, and three major telecommunication companies will likely continue,...

Full Report