May 8, 2012 / 11:27 AM / in 7 years

New Tepco head vows to be open to public opinion

(Reuters) - The president-designate of Tokyo Electric Power Co (9501.T), the owner of the Fukushima nuclear plant, said he would be sensitive to public sentiment when rebuilding the once-powerful utility that is set to be nationalized.

Tepco, set to be taken over by the government in a $12 billion bailout scheme awaiting the industry minister’s approval, said on Tuesday managing director Naomi Hirose, who oversees compensation for the Fukushima disaster victims, was to be president.

Tepco is saddled with trillions of yen compensation and clean-up costs after last year’s radiation crisis at its Fukushima Daiichi plant.

Public confidence in the utility was shattered after the crisis and the firm’s way of handling the disaster’s aftermath was widely perceived as arrogant.

“I constantly feel that we need to be a little bit more sensitive to how the society and the customers perceive Tokyo Electric,” Hirose, who has met with the Fukushima victims many times, told a news conference.

“Our attitude was such that we know the best, that we are the ones to provide the best answer and that others should silently follow. But this won’t lead to consumer satisfaction.”

Prior to the Fukushima disaster, Tepco, which has 52,000 employees and provides electricity to some 45 million people in the Tokyo area, was the most powerful of Japan’s ten utilities that are regional monopolies.

Industry Minister Yukio Edano, tasked with approving Tepco’s bailout and business turnaround plan, said Hirose was an appropriate choice.

“He has dealt with the victims on compensation issues from the frontline. He has also been involved in sales for a long time, so he knows with his skin how people from the outside see Tepco and how important it is to operate the company from the standpoint of the victims and consumers,” Edano told reporters.

Hirose will be working with Kazuhiko Shimokobe, a lawyer experienced in turning around troubled businesses, who the government chose as the next chairman. They will be formally appointed in June after the general shareholders’ meeting.

Shares in Tepco ended 3.4 percent higher.

Edano is expected to approve the bailout and business turnaround plan, which Tepco submitted last month, as early as Wednesday, a source told Reuters.

The plan calls for the government to inject 1 trillion yen in taxpayer’s money to Tepco and in exchange take a majority stake in the firm, which will allow for it to decide board members, sources said.

It is also likely to say that major creditors will lend Tepco an additional 1 trillion yen, and that the firm will aim to restart nuclear reactors at its Kashiwazaki Kariwa plant in the business year 2013/14 and hike household electricity rates by 10 percent, sources said.

Tepco faces a surge in costs to pay for fossil fuel to replace lost nuclear capacity, as all of its reactors are shut.

Hirose said it is unclear when the firm can pay back the taxpayers’ money. He also suggested that once the government sets its policy on the future of atomic energy, Tepco will follow this in deciding reactor operations in the long run.

For the utility to stay afloat, Edano must approve the plan by May 14, which is also the deadline for Tepco to announce its earnings result for the financial year that ended on March 31.

Reporting by Yoko Kubota in Tokyo and Adithya Venkatesan in Bangalore; Editing by Jon Loades-Carter

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