TEPCO to enter gas wholesaling by using Tokyo Gas pipelines

Jan 27, 2003 01:00 AM

Tokyo Electric Power Co. (TEPCO) plans to enter natural gas wholesaling in fiscal 2004 by using pipelines owned by Tokyo Gas Co. for a fee, TEPCO sources said.
Currently, there are 16 small and midsize gas-retailing companies in the Kanto region surrounding Tokyo which count on Tokyo Gas. TEPCO wants to turn some of them into its own clients, the sources said.

Since the pipelines of retailers other than Otaki Gas and Keiyo Gas, both in Chiba Prefecture, are not connected to TEPCO's wholesale pipelines, TEPCO plans to use Tokyo Gas pipelines on the assumption that a bill to enable access by rival wholesalers will clear the Diet and enter into effect in April next year, they said. The current regular Diet session is expected to legislate the bill obliging gas wholesalers to open their pipelines to access by other would-be wholesalers in a bid to spur competition and cut costs for retailers and consumers.
Since retailers in the Kanto region can currently buy gas only from Tokyo Gas, their costs tend to go up, especially during winter, when households, factories and offices consume more gas. The quantity of gas that these retailers buy from Tokyo Gas tends to top a threshold under which retailers would be entitled to relatively inexpensive "basic fees." TEPCO will wage a marketing campaign targeting the retailers by saying a diversification of suppliers would enable them to cut costs during the season of strongest demand, they said.

TEPCO's gas division currently sells gas only to Otaki Gas, based in Mobara, Chiba Prefecture, on a wholesale basis. The division hopes to start selling gas on a wholesale basis to Keiyo Gas, a retailer based in Ichikawa, Chiba, starting in 2006. Until then, TEPCO will install equipment to mix natural gas and LPG, so the "heat quantity" of the gas that it will supply can be adjusted to 11,000 calories per cm.
Since TEPCO plans to send gas to retailers through the Tokyo Gas pipelines, the heat quantity of its gas must be adjusted to the same level as that of Tokyo Gas, they said. At present, TEPCO has contracts with four companies, including Otaki Gas and Keiyo Gas, to supply gas.

The contracts call for TEPCO to sell a combined 150,000 tpy of gas. The supply contracts with the firms other than Otaki Gas and Keiyo Gas are based on the presumption that the bill will clear the Diet to enable access by would-be rival wholesalers, they added.

Source: Kyodo
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