Fukushima $137 Billion Cost Has Tepco Seeking More Aid
Tokyo Electric Power Co. (9501) asked the government for more aid after estimating it may need at least 11 trillion yen ($137 billion) to cover costs from last year’s nuclear disaster at its Fukushima Dai-Ichi power plant.
The utility, which has lost 94 percent in Tokyo trading since the March 2011 disaster, may have to pay more than 10 trillion yen to decontaminate areas around the plant and compensate those affected by the disaster, it said in a two-year business plan through March 2015 released yesterday.
Decommissioning the four damaged reactors is forecast to be an “enormous cost,” exceeding its earlier projection of “less than 1 trillion yen,” the utility known as Tepco said in the report.
In a 10-year business plan approved by the government in May, the state-run Nuclear Damage Liability Facilitation Fund injected 1 trillion yen into Tepco in July and took control of the utility after the disaster left it almost insolvent. Without additional state aid, Tepco’s survival is again in doubt as it’s likely the estimated costs will exceed what one company can afford, the utility said.
“The government is likely to refuse to cover all the additional expenses” as extra aid would draw public criticism, Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities Co., said before the announcement. At the same time, “the government has to keep Tepco alive” as compensation payments to those who lost homes and livelihoods would be at risk if the utility goes bankrupt, he said.
The government set aside 9 trillion yen previously as part of the bailout of Tepco and to pay compensation and cleanup costs related to radiation leaks.
On May 11, Trade and Industry Minister Yukio Edano, who oversees energy companies, indicated the government may pay part of the costs to decontaminate areas around the coastal plant while Tepco should be responsible for expenses to decommission and dismantle the reactors.
As part of measures to restructure, the utility will cut 100 billion yen in costs in each of the next two years in addition to a 3.4 trillion yen reduction over 10 years pledged in the long-term plan, it said.
After 2013, it will set up three companies within the utility for handling fuel and thermal power generation, transmission and distribution, and retail sales. The utility will consider a new corporate structure based on government reforms, which may call for an end to regional power monopolies, Tepco President Naomi Hirose told reporters yesterday in Tokyo.
Under the fuel and thermal-power business, Tepco will expand the use of liquefied natural gas that has a low calorific value, such as that from shale gas in North America, to as much as 10 million tons per year, about half of its need, the utility said.
It will also seek business alliances with Japanese and foreign companies to develop power plants, the utility said. Tepco will invite bids for the supply of 10,000 megawatts of thermal power to replace old thermal plants, in addition to 2,600 megawatts announced earlier.
The utility plans to set up a Fukushima headquarters as early as January and increase the number of employees assigned to recovery work in the prefecture to more than 4,000 from 3,500. The company may build a “cutting-edge coal-fired plant” in Fukushima to create local jobs, it said.