Overcharging appears to have netted TEPCO about 600 billion yen (around $8.2 billion) over the past 10 years, which the utility was able to do by reporting costs higher than they actually were.
“We suspect the excess money came from an inaccurate cost calculation at the time of submission rather than any attempt to make operations more efficient,” a report made by the government body investigating TEPCO said.
Electricity prices in Japan are decided by utilities, which run as monopolies in their service areas. Rates are determined by calculating costs, including such factors as labor, fuel and maintenance expenses, with a margin added for profit. Utilities submit an estimate of costs to the government for permission to set charges and these are usually rubber-stamped.
The government investigation into TEPCO said its estimated costs for the past decade were 618.6 billion yen higher than what it actually used. Over-estimation of maintenance costs is believed to have been behind TEPCO’s huge divergence.