Japan Needs Nuclear as Main Energy, Kansai Elec’s Mori Says

Kansai Economic Federation Chairman Shosuke Mori
Shosuke Mori, chairman of Kansai Electric Power Co. and chairman of the Kansai Economic Federation. Source: Kansai Economic Federation via Bloomberg

Japan needs nuclear power as its main energy source and the country shouldn’t follow European examples in banning new reactors, said Shosuke Mori, chairman of Kansai Electric Power Co., the nation’s second-biggest power producer.

“It’s the only way to secure a stable supply of environmentally clean electricity at a relatively low cost,” Mori, who also heads the Kansai Economic Federation, the biggest business lobby in western Japan, said last week in an interview in Osaka. “Nuclear power should keep its current status.”

The earthquake and tsunami that crippled Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant in the northeast and Prime Minister Naoto Kan’s request for Chubu Electric Co. to shut its Hamaoka plant to strengthen disaster defenses have cast doubt on how Japan will meet its energy demands. Kansai Electric, which supplies the country’s second-largest commercial region, joined Tokyo Electric this month in asking users to cut consumption this summer by 15 percent to avert blackouts.

Mori said Kansai Electric made the request because four of the company’s 11 reactors shut for regular maintenance haven’t been approved for restart. The move may pressure Panasonic Corp., Sharp Corp. and other companies based in the region around Osaka as they work to recover production after the country’s March 11 disaster.

Italian Vote

The reactors, located 80 kilometers (50 miles) north of Osaka on the Japan Sea coast in Fukui prefecture, accounted for about 45 percent of Kansai Electric’s total power generation in the year ended March 31, while renewable energy sources such as solar and wind power account for only 1 percent, according to the utility’s website.

“The proportion of alternative energy sources will probably increase after Fukushima,” Mori, 70, said. “It may rise to 2 or 3 percent but not to the level that can replace nuclear power because supply is too unstable and expensive.”

Mori said referendums on nuclear power, like the one in Italy earlier this month, are “inappropriate” because securing an energy supply is an issue of national security.

“Emotional responses shouldn’t dictate our decisions at times like this,” he said.

The Italian vote banning nuclear power, which followed the Fukushima disaster, the worst such accident since Chernobyl in 1986, passed by a margin of more than 90 percent and followed the German government’s pledge in May to discontinue nuclear energy by 2022.

Nuclear Opposition

Yuji Nishiyama, an analyst at Credit Suisse Group AG, said Mori’s views may be a “holdover” from a time before the Fukushima accident.

“It’s still unknown how much it will cost Japan’s utilities to the fix damage caused by the disaster and pay compensation,” said Nishiyama, who has a “neutral” rating on Kansai Electric and has suspended coverage on Tokyo Electric.

While Japan is still focused on containing the radiation leaking from the Fukushima plant and Kan’s leadership has been weakened by a pledge to resign after the crisis is brought under control, calls to change nuclear energy policies are increasing. A government document submitted this month concluded the country needs a national debate on the “whole concept of nuclear power generation,” including a calculation of its total cost.

Anti-nuclear protests were organized in cities, including Tokyo and Osaka, around the three-month anniversary of the disaster and governors of prefectures with reactors are asking for new safety guidelines. Kyodo News yesterday reported that Osaka Mayor Kunio Hiramatsu, whose city is Kansai Electric’s biggest shareholder, told the company he wants to eliminate nuclear power plants. Kyodo didn’t say where it got the information.

‘Strike While Hot’

Mori, who took over last month as chairman of the Kansai federation, said the disruption of transportation and distribution systems in Tokyo and eastern Japan following the March disaster may also provide an opportunity to reverse a decades-long trend that took investment and influence away from the western region.

“It’s now clear the whole nation will stop functioning if a big disaster hits the capital,” he said. “The earthquake proved the potential risks of limiting the government’s workings to Tokyo.”

Mori said the Kansai region, consisting of Osaka and its surrounding prefectures including Kyoto and Hyogo, used to account for almost a quarter of Japan’s electricity consumption when he joined Kansai Electric in 1963. That ratio is now about 17 percent, after the central government shifted its investment to the Tokyo area, he said.

“We in the west need to strike while the iron is hot if we want to attract people and companies here,” Mori said. “In a few years, people in Tokyo may start to forget what they went through.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE