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Who will pay the costs of decommissioning?


December 17, 2014


Power rates to reflect decommissioning costs even after deregulation




Regional utilities will be allowed to pass on costs to consumers for decommissioning nuclear power plants even after the retail sale of electricity to households is liberalized in 2016, according to sources.

The move proposed by the industry ministry reflects concerns that it could be difficult for the utilities to raise funds for decommissioning work if the liberalization produces fierce competition among electricity suppliers, the sources said.

However, the ministry could find itself being criticized for giving favorable treatment to regional electric power companies that have nuclear power plants even though its intention is to make decommissioning go smoothly, the sources added.

Costs for decommissioning nuclear power plants are already added to electricity bills. This is set to continue because liberalization of the market in 2016 will ramp up competition among electricity suppliers, and this could make it difficult for the major electric power companies to generate sufficient profits to carry out decommissioning work.

Companies that will spin off from the major electric power companies between 2018 and 2020 to specialize in transmitting electricity will collect costs for decommissioning work.

These companies, which will still be under the umbrellas of the regional utilities, will add decommissioning costs to electric cable use fees paid by electricity sales companies, which collect electricity bills from individual households.

While the ministry wants all electricity sales companies to shoulder the burden of costs for decommissioning, some of the new firms may decide to specialize in sales of electricity from renewable energy sources to consumers who are opposed to nuclear power generation.

In that event, those companies would sharply oppose being required to bear some of costs for decommissioning work.

To get round the problem, the ministry may decide that only firms selling electricity from nuclear power plants will shoulder the burden.

In the case of a midsized reactor that can generate 800 megawatts of electricity, the costs for decommissioning range from 44 billion yen to 62 billion yen ($377 million to $532 million). The costs include plant dismantlement and radioactive waste disposal.



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