The industry ministry has put forth a ridiculous proposal on financing compensation payments to victims of nuclear accidents.
In essence, the ministry’s proposal is designed to bail out operators of nuclear power plants that have failed to set aside compensation money for possible accidents at facilities that have been in service for decades.
To secure necessary funds for potentially huge compensation payments, the ministry wants to require old customers to bear part of the burden.
The Ministry of Economy, Trade and Industry, which regulates the power industry, has submitted this proposal to a panel of experts discussing the issue.
This effectively means shifting the cost of bad management to people who are not responsible, an approach that defies common sense in the world of business management and obscures the responsibility of the operators. The ministry should withdraw the proposal.
The law concerning compensation for nuclear accident-related damages stipulates that in principle operators are responsible for paying compensation for all damages caused by accidents at their facilities.
But the 2011 disaster at the Fukushima No. 1 nuclear power plant, operated by Tokyo Electric Power Co., prompted the government to set up an entity to pay compensation to the victims. Under this arrangement, TEPCO and other established electric utilities will pay back the money over a long period of time.
This new system, based on the notion of mutual help, is designed to get nuclear power plant operators involved in a joint effort to cover the risks of nuclear accidents.
The utilities involved are allowed to raise their electricity rates to finance contributions to the system. So the burden is actually borne by customers of the utilities.
The ministry’s new proposal would widen the scope of contributors to the pool of money for compensation payments. The new contributors include electricity suppliers that have entered the market in response to its liberalization even though they don’t operate nuclear power plants.
Specifically, the new utilities would be required to make contributions through the increased fees they pay to use the power transmission lines operated by established utilities. That would force almost all people in this country to shoulder part of the burden.
Here’s the ministry’s case for this scheme.
The money needed to pay compensation for damages caused by nuclear accidents should have been set aside since the 1960s, when nuclear power generation started in Japan. So it is appropriate to require people who paid low electricity rates that didn’t include this cost to bear the burden now.
Behind the ministry’s move is the fact that the total compensation amount related to the Fukushima nuclear disaster has already surpassed the original estimate and is now reaching 6 trillion yen ($54 billion). The amount is expected to grow in the coming years.
Even so, if past beneficiaries of low electricity rates are involved, the established utilities should be first forced to use the profits they accumulated in the past through their nuclear power operations.
At the very least, no consumer would accept such a new financial burden unless the utilities are held responsible for failing to save up for emergencies during the past half century.
The ministry has also proposed similar plans to tap the fees paid by new power suppliers for use of established utilities’ transmission cables to cover the costs of decommissioning the reactors at the crippled Fukushima plant and aging reactors at other plants.
The latest proposal is the third scheme based on this approach.
Imposing part of the burden on newcomers in the power market is tantamount to giving preferential treatment to nuclear power and undermines the fair competitive environment that is the foundation for power deregulation.
Some consumers have switched from established utilities to new power suppliers because of their aversion to nuclear power generation.
Clearly, adequate compensation should be paid to victims of nuclear accidents.
But the costs related to nuclear power generation should be shouldered by the operators of nuclear plants. An unreasonable scheme to shift this burden from the operators is simply unacceptable.