Decommissioning: What cooperation?

November 16, 2016

TEPCO may struggle to find partners due to Fukushima decommissioning costs

http://mainichi.jp/english/articles/20161116/p2a/00m/0na/008000c

Naomi Hirose, president of Tokyo Electric Power Company Holdings Inc. (TEPCO), presented a proposal to reform the operator of the crippled Fukushima No. 1 Nuclear Power Plant to the Economy, Trade and Industry Ministry's expert panel on Nov. 15.

Under the proposal submitted by Hirose on the reform of TEPCO and issues related to the crippled Fukushima nuclear power plant, TEPCO is to collaborate with other power companies in the areas of nuclear power generation and energy transmission and distribution in an effort to boost its earning power. But if other major utilities were to work with TEPCO on a nuclear power project, questions would be raised about how to split risks such as decommissioning costs for the crippled Fukushima plant among companies concerned. Such being the case, TEPCO will likely have difficulty finding partners.

Hirose attended the closed-door expert committee meeting as an observer. Committee chairman Kunio Ito (specially-appointed professor at Hitotsubashi University) and a senior industry ministry official revealed the details of Hirose's reform proposal at a news conference after the panel meeting.

According to details revealed at the news conference, Hirose proposed to step up TEPCO's cooperation with other power companies on its nuclear power business including the areas of safety measures, joint technological development and overseas business operations. The industry ministry had already proposed at an expert panel meeting that TEPCO spin off its nuclear business into a subsidiary and collaborate with other utilities, among other moves. TEPCO is expected to incorporate these plans into the "New Comprehensive Special Business Plan" that is set to be revised early next year in line with discussions at expert panel meetings.

Under the current New Comprehensive Special Business Plan, TEPCO assumes reactivation of its Kashiwazaki-Kariwa Nuclear Power Plant as a source of earnings to be used to rebuild itself. But there are no prospects of the power plant being reactivated as the governor of Niigata Prefecture, which hosts the nuclear facility, is taking a cautious stance toward reactivation. The industry ministry wants to secure understanding of a plan to reactivate the nuclear power plant by improving the creditworthiness of TEPCO's nuclear business through collaboration with other utilities. But because there is a possibility of other power companies being forced to shoulder the costs of decommissioning the crippled Fukushima plant, it remains unclear whether TEPCO will be able to cooperate with those utilities as envisioned.

A member of the expert panel was quoted as saying at the meeting, "A proper alliance cannot be formed unless ways of shutting off the risks (for possible alliance partners) are considered. Hirose also proposed that TEPCO work with other firms in the area of power generation and transmission, as well as jointly procure materials with other firms.

As for the costs of decommissioning the Fukushima No. 1 nuclear plant, which are expected to exceed the initial estimate by several trillion yen, and expenses for paying compensation to nuclear disaster victims, the expert panel confirmed plans for TEPCO to minimize financial burdens on the public through management efforts. An expert panel member was quoted as saying at the Nov. 15 meeting, "If TEPCO's liability is defined as limited, the general public will see the move as relief measures for TEPCO. We should carefully consider public opinion."