Tepco Applies for Niigata Restart Amid Fukushima Cleanup

Tokyo Electric Power Co. (9501), the operator of the crisis-ridden Fukushima Dai-Ichi atomic plant, applied to restart another nuclear facility in western Japan, even as it works on the cleanup at Fukushima.

Tokyo Electric, also known as Tepco, submitted documents to Japan’s nuclear regulator today seeking safety checks on two reactors at its Kashiwazaki-Kariwa plant, it said in a statement. The application is a step toward restarting the station, which was idled for maintenance in March 2012. The Tokyo-based utility’s shares surged as much as 11 percent.

Tepco, which reported a loss of 685.3 billion yen ($6.9 billion) last fiscal year, calls Kashiwazaki-Kariwa key to its return to profitability. Meanwhile, the utility is in final talks with a group of banks led by Sumitomo Mitsui Banking Corp. to approve the extension of 80 billion yen in loans, according to a person familiar with the matter.

“We don’t want to raise electricity rates as much as possible,” President Naomi Hirose told reporters today in Tokyo. The application “is one step forward,” he said.

If operations at Kashiwazaki-Kariwa remain suspended, Tepco would need to increase the rate it charges consumers for electricity by 8.5 percent to 10 percent as early as January to achieve a pretax profit for the year to March 2014, a company document obtained last month by Bloomberg News showed. Tepco serves 29 million people in the Tokyo metropolitan area, the world’s largest. It raised household rates by about 8.5 percent in September 2012.

Conditional Approval

The path toward restarting the reactors became clearer yesterday after Niigata Governor Hirohiko Izumida, who’s been critical of Tepco’s handling of Fukushima, said he’d allow the safety check application, albeit with conditions.

Approval for the reactors located in his prefecture will be revoked should Tepco fail to control levels of radiation exposure for residents after installing vents, Izumida said yesterday in a statement to the utility’s president.

Prime Minister Shinzo Abe this month vowed to end the country’s “ad hoc” response to the Fukushima nuclear disaster of March 2011. The government plans to spend 47 billion yen to stop leaks of radioactive water after the utility reported that 300 metric tons had spilled from one of more than 1,000 storage tanks at the plant.

Hirose Apology

“I’m sorry for adding new concern and inconvenience because of contaminated water issues,” Hirose told a parliamentary committee today.

The Niigata plant, the world’s largest nuclear power station by generating capacity, sits on a site by the Sea of Japan on the opposite coast from Fukushima.  

Tepco will set up a secondary nuclear venting system at the No. 6 and No. 7 reactors at Kashiwazaki-Kariwa, Hirose said Sept. 25, following a meeting with governor Izumida. Under new safety rules, nuclear plants in Japan must install radiation filter vents.

Kashiwazaki-Kariwa, 220 kilometers (137 miles) northwest of Tokyo, consists of seven reactor units ranging in age from 16 years to 28 years, according to the Nuclear Regulation Authority, Japan’s nuclear regulator. 

The regulator will discuss how safety checks are proceeding at regular meetings, including the issue of fault lines beneath the plant, Hideka Morimoto, deputy secretary general at the agency, said today at a press conference in Tokyo. According to Tepco, the fault lines under Kashiwazaki-Kariwa have been inactive for about 200,000 years.

Market Reaction

Tepco’s shares were up 37 yen, or 6.6 percent, to 597 yen in Tokyo, the best performer on the Nikkei 225 (NKY) Stock Average. The shares earlier rose to as high as 624 yen.

Aside from the 80 billion yen loans, the company is also seeking to roll over 200 billion yen in borrowings and get a new loan worth 300 billion yen in December from 10 lenders, as part of a 1.07 trillion yen finance plan agreed to in 2012. The utility has 4.26 trillion yen in bonds outstanding, according to data compiled by Bloomberg.

“There remain too many problems that need to be resolved,” said Yuuki Sakurai, the president of Fukoku Capital Management Inc., which manages 1.8 trillion yen of assets. “It’s a bit too early to discuss whether this situation is positive or negative for Tepco.”

To contact the reporters on this story: Iain Wilson in Tokyo at iwilson2@bloomberg.net; Masumi Suga in Tokyo at msuga@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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