Gold Drops to $1,200/oz for First Time Since June in New York
Tepco Minutes Show Executives Voiced Staff Exodus Concerns
Tokyo Electric Power Co. (9501) executives spent dozens of meetings fretting about the company’s future as hundreds of younger employees quit over salary cuts after Fukushima, according to minutes obtained by Bloomberg News.
“The company could quickly deteriorate” as workers leave at “a rapidly accelerating rate,” an unidentified executive said at an Oct. 4 meeting last year of the government-backed fund designed to bail out the utility. Tepco, as it’s known, faces an estimated 11 trillion yen ($116 billion) in cleanup costs from the wrecked Fukushima Dai-Ichi plant.
The comments are in redacted proceedings of 23 meetings of the fund’s steering committee held from Oct. 3, 2011, to April 8, 2013, obtained through a freedom of information request.
Almost 1,200 employees voluntarily resigned in the two years ended in March this year, Tepco Managing Executive Officer Mamoru Muramatsu said in an April 8 meeting, according to the minutes. Turnover among employees under 30 accounted for about half of all voluntary departures, President Naomi Hirose said at a Nov. 12 meeting.
“The biggest reason is money,” Hirose said, according to the minutes. “It’s difficult for us to stop them when they say they have loans and have to take care of kids and so on.”
The notes offer the first full view of the committee’s operations and talks among senior officials involved in the Tokyo-based utility’s revival following the Fukushima earthquake and tsunami in March 2011. The workings of the committee are contained in 227 pages, parts of which mask most attendees’ names and agenda items deemed too sensitive to be made public, according to a letter from the fund provided to Bloomberg as part of the request.
Tepco shares fell 1.7 percent to close at 538 yen on the Tokyo Stock Exchange, the worst performance among Japan’s 10 regional power companies. The TOPIX Electric Power & Gas Index rose 1.5 percent while the benchmark Nikkei 225 Stock Average declined 0.2 percent.
The utility cut annual salaries by 25 percent for managers and 20 percent for workers under its turnaround plan released in May last year. The average annual salary of Tepco employees over the three years ending March 2015 will be reduced to 5.9 million yen, the utility said in a July 25 statement.
“Currently within the Japan energy sector, particularly within renewables, there is a shortage of talented professionals and I foresee that increasing numbers of Tepco employees will realize their market worth and will look for outside opportunities,” Sean Travers, representative director at EarthStream K.K., a global recruiting firm specializing in the energy sector, wrote in an e-mail.
Motivation among remaining Tepco employees may flag because of uncertainty about how much of the Fukushima cleanup costs Tepco will be required to shoulder, three unidentified attendants of the Oct. 4 meeting said, according to the minutes.
Tepco, which has accumulated 2.7 trillion yen in combined losses for the past three fiscal years, had a workforce of 48,757 on a consolidated basis as of March 31, down about 5,300 from the beginning of fiscal 2011, it said in a May 9 statement.
Kansai Electric Power Co. and Chubu Electric Power Co., Japan’s second- and third-biggest utilities by generating capacity, added workers in the two fiscal years to March 31, 2012, according to data compiled by Bloomberg. Kansai Electric’s workforce expanded 2.7 percent to 32,961, while Chubu Electric’s rose 2.3 percent to 29,774.
The number of workers at Tepco’s Fukushima Dai-Ichi and Fukushima Dai-Ni plants totaled about 3,000 and 1,300, respectively, as of early June, spokeswoman Kaoru Suzuki said by phone, adding that staffing fluctuates depending on operations. Peak staffing after the disaster totaled 4,000 at Dai-Ichi and 2,250 at Dai-Ni, she said.
Tepco has secured enough workers to continue operations at the two plants for the time being, she said.
Bullet-point summaries covering the major topics discussed by the steering committee have been released previously but not the full minutes.
Members of the state-backed Nuclear Damage Liability Facilitation Fund’s steering committee include Central Japan Railway Co. (9022) Chairman Yoshiyuki Kasai, Dowa Holdings Co. former Chairman Hirokazu Yoshikawa and Tadashi Maeda, a senior official at the Japan Bank for International Cooperation.
In addition to staffing concerns, discussions related to the size of the utility’s cleanup bill for the Fukushima disaster arise frequently in the minutes.
Company Health Concerns
Final costs associated with Fukushima are unknown because decontamination projects are at an early stage, meaning the time isn’t right to request additional aid from the government, an unidentified person said during a Nov. 12, 2012, meeting of the steering committee after Tepco sought government support.
“The biggest concern is that the company will collapse if we wait until the cost is fixed,” Takashi Shimada, a former senior official at the Ministry of Economy, Trade and Industry who is now an executive officer at Tepco, said in response, according to the minutes.
The government should review the structure under which Tepco must pay all decontamination costs, Shimada said at the time, according to the documents.
Tepco had paid 2.21 trillion yen in compensation by late April this year, it said in an April 30 statement. The utility asked the government’s bailout fund to increase the compensation aid by 666 billion yen to 3.79 trillion yen on May 31 after revising for a fourth time its estimate on payments to those affected by the disaster.
The March 2011 earthquake and tsunami caused meltdowns and radiation leaks at the Fukushima plant, forcing about 160,000 to evacuate and leaving some areas uninhabitable for decades. The accident also prompted the closing of all but two of the nation’s nuclear reactors, effectively shutting down an energy source that once supplied more than a quarter of Japan’s electricity.
More than 10 trillion yen will be needed to pay compensation to those affected by the disaster and to clear areas contaminated by radioactive substances from the Fukushima plant, Tepco estimated Nov. 7 in a two-year business plan. Decommissioning the damaged reactors at the Fukushima Dai-Ichi station may “far exceed” the 1 trillion yen allocated by Tepco, it said at the time.
The government should “promptly consider establishing a new support framework to handle the huge amount of financial risk that exceeds the limit under the Nuclear Damage Liability Facilitation Fund Law and the cost of decommissioning of the reactors,” Tepco said at the time.