Tokyo Electric Power Co <9501.T> plans an additional 100 billion yen ($1.3 billion) in cost cuts and is considering selling thermal power plants to help cover compensation and cleanup costs at its crippled Fukushima nuclear power plant, a source familiar with the situation said on Wednesday.

The cost cuts would top up a 10-year, 2.54 trillion yen cost reduction plan announced last month as Japan's largest utility struggles with the aftermath of the world's worst nuclear disaster since Chernobyl a quarter of a century ago.

The utility, also known as Tepco, is likely to decide by the end of the financial year in March whether to go ahead with power plant sales, the source said, although a decision on which facilities to sell may not come until later.

The utility is also expected to forgo construction of new thermal plants and to purchase power from independent producers.

A Tepco spokeswoman said nothing had been decided on the possible sale of power plants.

The utility has been unloading assets to pay for the costs of the disaster, including last month's 186 billion yen sale of its entire stake in telecoms carrier KDDI Corp <9433.T>.

Tepco is due to receive $11.5 billion as its first installment in a taxpayer-funded bailout to assist in compensating victims of the nuclear disaster, which saddled it with massive net losses of 1.25 trillion yen in the business year to March 2011 and another 600 billion yen loss forecast for the current financial year.

As a precondition for the bailout, Tepco unveiled an initial cost-cutting plan aiming at more than 2.5 trillion yen in cost savings over 10 years and shedding 7,400 jobs by March 2014.

The utility has been preparing a detailed action plan to achieve those cuts, which is due to be announced as early as this week, and in the process came up with an additional 100 billion yen in savings from personnel costs and other areas.

The company had come under pressure to make bold restructuring moves as public anger mounted over the massive taxpayer bailout, which was approved despite criticism that it did not take adequate safety measures at the Fukushima plant and mishandled its response to the crisis.

Tepco shares ended 0.7 percent lower, compared with a 1.7 percent rise in the benchmark Nikkei average <.N225>.

($1 = 77.7600 Japanese yen)

(Additional reporting by Risa Maeda and Mayumi Negishi; Writing by Edmund Klamann; Editing by Joseph Radford)

Japan