Tepco Surges a Fourth Day on Reactor Restart Speculation

Tokyo Electric Power Co., operator of the stricken Fukushima Dai-Ichi plant, surged for a fourth consecutive day, bringing gains to 59 percent in the period amid speculation it will apply soon to restart idled reactors.

Shares of the utility known as Tepco rose 12 percent to 815 yen at the end of trading on the Tokyo Stock Exchange, their highest close since March 25, 2011. Tepco, which is also Japan’s biggest power company by generating capacity, is the best performer on the benchmark Nikkei 225 stock average in the past four days and is the fourth-best performer among MSCI AC Asia Pacific Index members today.

Tepco’s 13 nuclear reactors remain shut, along with most of Japan’s atomic plants, as the nation’s utilities carry out checks and upgrade equipment to meet new safety rules after the Fukushima earthquake and nuclear disaster. Based on a turnaround plan released in May 2012, Tepco has said it may return to profit this fiscal year assuming four of seven reactors at its Kashiwazaki Kariwa nuclear plant will be restarted by December.

“Whether the Kashiwazaki Kariwa plant can resume operations would make the difference between life and death for Tepco,” said Tomoko Murakami, a nuclear analyst at the Institute of Energy Economics, Japan. Should Kashiwazaki Kariwa not be restarted, “the only remaining option for Tepco would be to raise electricity rates further.”

Tepco Restart Questions

Tepco, which relies on coal-, gas- and oil-fired plants to make up for lost nuclear power generation, lifted electricity rates for households by 8.46 percent in September to cover rising fuel costs.

Tepco shares yesterday rose 16 percent to 726 yen after the Yomiuri newspaper reported the utility will apply to the Nuclear Regulation Authority for a restart of No. 1 and No. 7 units at the Kashiwazaki Kariwa plant in northern Japan in July.

Tepco denied the Yomiuri report and said the utility is still designing a filtered vent system, part of the new safety requirements to be set by the nuclear safety watchdog. The company can’t say when it can complete the installation.

The utility has lost 62 percent of its market value since the March 11 quake and tsunami in 2011 caused three meltdowns and the release of radiation at the Fukushima Dai-Ichi plant.

Abe Fuels Surge

The Nikkei 225 has advanced about 50 percent in the same period and the 17-member TOPIX Electric Power & Gas index is down about 19 percent.

Last month, Japan’s nine power companies reported combined losses of about 1.6 trillion yen ($15.6 billion) for a second consecutive year as they face higher fossil fuel bills with most nuclear reactors shut. The utilities will be forced to pay 3.8 trillion yen more in combined fuel costs this fiscal year, compared with fiscal 2010, because of shutdowns and a weaker yen, according to a government advisory board estimate in April.

The Nikkei has surged since the beginning of the year as Prime Minister Shinzo Abe, aided by the Bank of Japan, embarked on a quest to end 15 years of deflation and reinstate Japan as a pillar of the global economy.

The yen has fallen more than 15 percent against the dollar this year, the biggest decliner among 16 major currencies tracked by Bloomberg, amid the Bank of Japan’s introduction of a new easing policy to help the government fight deflation.

The Nikkei’s 48 percent gain since Jan. 1 compares with a 17 percent advance for the Dow Jones Industrial Average and a 16.8 percent rise for the Standard and Poor’s 500 index.

Abe, who took office in December, is reviewing Japan’s energy policies and plans to set out a strategy later this year after parliamentary elections due in July. He told lawmakers on Feb. 28 that he’ll restart some nuclear reactors once the nation’s nuclear safety watchdog confirms the safety of the plants. The previous government aimed to phase out nuclear power by the end of the 2030s.

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