Japan Increases Scrutiny on Nuclear Risks While Maintaining Atomic Policy

Japan, fighting to contain the world’s worst nuclear accident in 25 years, stepped up scrutiny on the ability of power plants to withstand earthquakes and tsunamis while pledging to stay committed to atomic energy.

The government has no plans to ask utilities to shut reactors apart from Chubu Electric Power Co.’s Hamaoka facility, which is located near a fault-line, Deputy Chief Cabinet Secretary Yoshito Sengoku said yesterday. Japan views atomic power as part of its energy policy, he said on NHK Television.

The March 11 earthquake and tsunami that crippled Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant have raised concern that nuclear stations in Japan aren’t adequately protected from natural disasters. Prime Minister Naoto Kan told Chubu Electric to shut its sole nuclear plant, citing a government study that indicated an 87 percent chance of a magnitude-8 temblor striking the area within 30 years.

“Chubu will eventually accept the prime minister’s request,” said Osamu Fujisawa, an independent energy economist based in Tokyo. “I don’t think they can go against public opinion now.”

The three reactors at Hamaoka, 190 kilometers (118 miles) southwest of Tokyo, should be suspended until additional safety measures such as building a sea wall are implemented, Kan said on May 6.

The board of Japan’s third-biggest utility held a meeting one day later to consider Kan’s request and reached no decision, Tokyo-based company spokesman Akio Miyazaki said. On the same day, Chairman Toshio Mita flew to Qatar for talks with the utility’s largest supplier of liquefied natural gas to secure additional LNG for its thermal power plants in the event that Hamaoka closes, Miyazaki said yesterday.

Additional LNG Purchases

“The fact that it held an extraordinary board meeting and the chairman is visiting Qatar prove that the company is preparing for the Hamaoka closure,” said Fujisawa. “Before a decision can be made, Chubu Electric has to make sure it can secure fuel supplies and it can buy power from other utilities if needed.”

Chubu Electric, which originally planned to buy 8.42 million metric tons of LNG in the year ending March 2012, may need to get an additional 4 million tons for thermal power generation if Hamaoka’s No. 4 and No. 5 reactors shut and the No. 3 unit remains off-line, company spokesman Miyazaki said. The No. 3 unit has been closed for regular checks since November, while the No. 1 and No. 2 units are in the process of being scrapped.

The extra LNG purchase would cost about 212.3 billion yen ($2.6 billion), according to Bloomberg calculations based on the latest average LNG import price compiled by the finance ministry.

Chubu Electric’s profit forecast of 55 billion yen for the year is based on the assumption that the No. 3 reactor will resume operation in about two months. The utility announced the forecast on April 28.

The Hamaoka plant is located in Shizuoka, a prefecture with a population of 3.75 million, according to the local government’s website. The accident at the Fukushima facility, 220 kilometers north of Tokyo, has forced the evacuation of 50,000 families in the area.

To contact the reporter on this story: Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net.

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