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UPDATE 1-Japan's Tepco, Chubu to merge fossil fuel power businesses
March 28, 2017 / 10:52 AM / 4 months ago

UPDATE 1-Japan's Tepco, Chubu to merge fossil fuel power businesses

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TOKYO, March 28 (Reuters) - Tokyo Electric Power Company Holdings (Tepco) and Chubu Electric Power Co said on Tuesday they had signed an agreement to integrate their fossil fuel power plants under their JERA Co joint venture.

The biggest and third-biggest of Japan's regional power utilities aim to combine the businesses in April-September 2019 to form a company that will oversee 68 gigawatts of capacity and account for nearly half the country's domestic power generation.

The agreement is the last of a three-step plan for JERA, which will oversee a global resource chain from upstream investment, procurement and trading to power generation.

The two firms in 2015 created JERA, which now handles all of Tepco's and Chubu's upstream energy and fuel procurement business and is the world's biggest liquefied natural gas (LNG) buyer with annual purchase of around 40 million tonnes.

Tepco and Chubu Electric were to decide by around now, according to a timetable set up in 2015, on whether to integrate all their fossil fuel power plants.

One of the sticking points for the integration of JERA was that Tepco was essentially nationalised after the Fukushima nuclear disaster in 2011.

Tepco is to pay the majority of a 21.5 trillion yen ($194 billion) cost for compensation, decontamination and decommissioning, which raised worries that it may not be able to allocate necessary funds for JERA's growth plans.

Chubu Electric President Satoru Katsuno told a news conference that Tepco's new business plan released on March 22 assured Tepco's autonomy in its fossil fuels businesses, which he thinks shuts out the risks related to Tepco's nuclear disaster.

$1 = 110.6700 yen Reporting by Osamu Tsukimori; Editing by Tom Hogue

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