Tokyo says Tepco may stay nationalized to deal with massive cost of nuclear disaster
Faced with massive ongoing costs stemming from the 2011 nuclear crisis in Fukushima, Tokyo Electric Power Co. Holdings Inc. may remain under state control longer than initially planned, the government said Monday.
Under the current plan, the utility would gradually reduce government involvement in its management from April.
However, at a key panel meeting the government proposed a revised option in light of the huge compensation and decommissioning expenses that are involved.
The government leads the business operations of the utility, known as Tepco, acquiring 50.1 percent of its voting rights through the state-backed Nuclear Damage Compensation and Decommissioning Facilitation Corp.
Some ministry bureaucrats have also been dispatched to the utility.
It is understood the state-backed body will assess efforts to reform the company in late March and make a decision on whether to reduce state involvement.
“The direction of Tepco reform is coming into sight,” said Economy, Trade and Industry Minister Hiroshige Seko at the panel meeting. “We have to come up with a more detailed picture of the reform.”
The government is seeking to split the activities of the utility into “business operations,” including retail sales and power generation, and “Fukushima operations” related to decommissioning reactors at the disaster-hit Fukushima No. 1 nuclear plant and paying compensation, which would remain under public control.
As for Tepco’s business operations, the government plans to free them of state control at an early date, hoping to promote industry reorganization involving nuclear and energy distribution businesses.
The plan was revealed at the panel meeting at the trade ministry to study compensation and decommissioning issues facing the utility. The panel will compile proposals by the end of this year.
The government also seeks cooperation from other power companies in reactivating Tepco’s Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture, which would be the main source of its revenue.
With the involvement of other utilities, the government hopes to ease local distrust of Tepco’s nuclear plant operations. Two reactors at the Kashiwazaki-Kariwa plant are under prolonged safety examinations by nuclear regulators.
State ownership of TEPCO likely to continue as costs keep rising
The government will likely prolong its effective state ownership of Tokyo Electric Power Co. Holdings Inc. because the expected costs for decommissioning its ruined Fukushima No. 1 nuclear plant and paying compensation continue to soar.
The industry ministry mentioned the rising expenses at a meeting on Dec. 5 with scholars and others.
The ministry at the meeting showed a six-item report titled, “Tokyo Electric Power Co. and the state’s role.” One pillar of the report was that the state should urge TEPCO to perform its responsibilities.
However, one of the participants said, “The state should hold a certain ratio of (TEPCO) shares for a long period.”
The government-approved Nuclear Damage Compensation and Decommissioning Facilitation Corp. currently holds 50.1 percent of shares with voting rights of TEPCO.
The government planned to reduce the stake to less than 50 percent if it concluded at the end of this fiscal year that TEPCO could operate independently.
However, that scenario has collapsed.
Some sources now say total costs, including expenses for decommissioning and compensation, will probably exceed 20 trillion yen (about $176 billion).
TEPCO initially said that it would need a total of 11 trillion yen to resolve problems related to the plant that suffered a triple meltdown after being hit by the Great East Japan Earthquake and tsunami in March 2011.
That amount includes 2 trillion yen to decommission the reactors, 5.4 trillion yen to pay compensation to people affected by the disaster and 2.5 trillion yen to decontaminate areas polluted with nuclear substances.
However, an internal report worked out by the industry ministry in August showed that the costs for decommissioning would probably increase by 4 trillion yen and the compensation sum would likely rise by 3 trillion yen, making the total amount 18 trillion yen.