1.5 trillion yen spent last year on costs related to reactors

Only three of Japan’s 42 operable reactors are running

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The Unit 6 reactor of the Kashiwazaki Kariwa nuclear plant.

More than 6,000 workers cycle through the world’s biggest nuclear plant every day to operate and maintain a facility that hasn’t sold a kilowatt of electricity in more than four years.

The buzz at Tokyo Electric Power Co. Holdings Inc.’s Kashiwazaki-Kariwa plant plays out daily across Japan, where utilities employ thousands of workers and spend billions of dollars awaiting the green light to restart commercial operations. With only three of the country’s 42 operable reactors running, they’re betting a national government committed to nuclear power will win over local officials and a wary public who don’t believe enough has been done to guarantee safety since the worst meltdown since Chernobyl.

Even though operating expenses of non-generating reactors remain high, utilities would prefer to keep them open while there is any chance they can restart,” said James Taverner, a Tokyo-based analyst at IHS Markit Ltd. “Utilities have already committed significant expenditure for plants to meet new safety standards, and decommissioning costs are considerable.”

The nine biggest regional utilities spent more than 1.5 trillion yen ($14.6 billion) on their nuclear plants during the year to March, according to Bloomberg calculations based on the latest earnings reports. Over that same period, those plants accounted for just 1.1 percent of the nation’s electricity.

Nuclear-related costs accounted for 9 percent of all operating expenses at the utilities in the previous fiscal year, according to the calculations. That includes personnel and maintenance, as well as waste disposal and contributions to the nation’s nuclear damage compensation system.

The burden of paying for nuclear facilities producing little electricity has been softened by price declines in recent years for coal, natural gas and oil, which are also used as fuels for power generation. Tepco sees itself swinging to a net loss as fossil fuel prices recover, making the restart of Kashiwazaki-Kariwa key to profitability, Naomi Hirose, the company’s president, said in an interview earlier this year.

Emergency Drills

Costs for operating the country’s nuclear facilities were slightly higher before the March 2011 Fukushima disaster, at about 1.7 trillion yen a year, when atomic energy accounted for nearly 30 percent of Japan’s electricity mix. Tokyo Electric, also known as Tepco, estimates that restarting one of the newest reactors at Kashiwazaki-Kariwa — known as KK — would boost net income by as much as 10 billion yen a month.

The plant, the world’s biggest with generating capacity of about 8.2 gigawatts, has seven reactors at a facility spread across more than 1,000 acres and located about 135 miles (217 kilometers) northwest of Tokyo in the prefecture of Niigata.

Workers clad in jumpsuits and loaded down with manuals convene daily in a mock-up of the reactor control room, preparing for the restart of the plant under new safety guidelines imposed after the Fukushima meltdown.

Everyday, this room is full of workers, from fresh employees to old veterans, sharpening their skills,” Noboyuki Suzuki, a deputy manager in the company’s human resources development group, said at the KK plant last month. “Operators at this facility are required to go through training here on a regular schedule.”

About three-fourths of the Tepco employees and contract workers at the plant are from the prefecture housing the facility, making it one of the area’s biggest economic drivers.

The reactor is an economic windfall for the region, employing thousands of local workers and supporting restaurants, shops and even taxi companies, according to Kariwa village official Masayoshi Oota. “If the reactor were to disappear, then so would the economic benefit,” he said.

Japan’s nuclear energy industry employs more than 80,000 engineers, construction workers and operators, according to a report published by the Ministry of Economy, Trade and Industry last year.

To boost confidence in its facility’s safety, Tokyo-based Tepco has spent 470 billion yen on flood barriers, a 15-meter seawall and a reservoir the size of 30 Olympic-sized swimming pools to supply water in the event a reactor pump fails.

Kansai Electric Power Co. may spend 1.26 trillion yen on construction costs related to nuclear safety measures, while Chubu Electric Power Co. is estimated to spend 640 billion yen, according to a Sept. 14 report by Mitsubishi UFJ Morgan Stanley Securities Co.

KK’s restart is far from assured. The plant was forced to shut for 21 months following an earthquake in July 2007. Though some units eventually restarted, all were shuttered again after the March 2011 Fukushima accident for safety checks.

Public Opposition

There is skepticism among the Japanese public. The restart of nuclear reactors is opposed by 53 percent of Japanese and supported by just 30 percent, according to a nationwide poll conducted earlier this year by the Mainichi newspaper.

Local courts and governments have been some of the biggest roadblocks to restarting more reactors, crimping Prime Minister Shinzo Abe’s goal of deriving as much as 22 percent of the nation’s energy needs from nuclear by 2030. Goldman Sachs Group Inc. lowered its price target on six Japanese power utilities this month on risk of delays in restarting operations or renewed shutdowns.

Tepco shares in Tokyo on Thursday closed unchanged at 404 yen, while rivals Kansai Electric declined 3.1 percent and Chubu Electric slipped 0.3 percent. The Topix Electric Power & Gas Index has dropped 25 percent this year, weighed down primarily by Japan’s utilities.

Should KK clear the necessary regulatory, legal and political hurdles and resume operations, Tepco plans to maintain the facility’s workforce at current levels, a reflection of how many workers are needed even during a period called cold-shutdown.

Right now we are focused on the nation’s regulatory review of the plant,” said Chikashi Shitara, facility chief at KK. “Even though the plant isn’t running, there is still a lot we must do.”