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Fukushima disaster: 20 trillion yen...or more

November 28, 2016

Cost of Fukushima disaster expected to soar to ¥20 trillion





The overall cost of wrapping up the Fukushima nuclear disaster is now estimated at more than ¥20 trillion, nearly double the previous estimate, sources familiar with the matter said Monday.

The Ministry of Economy, Trade and Industry, which previously put the overall cost at ¥11 trillion, is considering passing on a portion of the costs, including for compensation and the decommissioning of the Fukushima No. 1 nuclear plant, to consumers via higher electricity prices, the sources said.

The aged, six-reactor plant, operated by Tokyo Electric Power Co. Holdings Inc., was plunged into a blackout by the March 2011 earthquake and subsequent tsunami, leading to three core meltdowns and the worst nuclear disaster since Chernobyl in 1986.

According to the new estimate, Tepco’s compensation payments will rise to ¥8 trillion from ¥5.4 trillion and decontamination costs will double to around ¥5 trillion.

Trillions more will be needed to decommission the reactors and deal with radioactive water at the plant, on top of the ¥2 trillion earlier estimated, the sources said.

The ministry has been discussing reforming crisis-hit Tepco and is about to draft a plan for the utility based on the new estimate within this year.

Combined with the cost of building interim waste storage facilities, foreseen to remain at ¥1.1 trillion, the total cost is forecast to surpass ¥20 trillion, the sources said.

The government is studying the possibility of expanding a ¥9 trillion interest-free loan program for Tepco that was set up by issuing government bonds to cover compensation payments and decontamination costs in areas hit by the disaster.

It is expected to take up to 30 years to recover the ¥9 trillion through payments from Tepco and other big utilities.

The government also plans to recover the expected increase in compensation payments and decontamination expenses by raising charges for transmission line usage for new electricity retailers.

In principle, Tepco needs to secure funds on its own for decommissioning the plant. The government will manage the funds, which will be established using profits generated by the utility. But it is not clear if Tepco alone can shoulder the cost.




Fukushima plant decommissioning, compensation costs to almost double: gov't est.



The Ministry of Economy, Trade and Industry estimates that the cost of decommissioning the disaster-stricken Fukushima No. 1 Nuclear Power Plant and compensation for disaster damage would top a total of 20 trillion yen -- almost twice the previous government forecast, it has been learned.

As the government is planning to have major utilities and smaller power companies that newly entered into the power market after its liberalization shoulder part of the snowballing financial burdens, consumers are certain to face increased electricity bills. The ministry is set to draw a conclusion later this year possibly based on the estimate after continuing discussions at an expert panel on the management reform of plant operator Tokyo Electric Power Co. (TEPCO) and on measures to secure financial resources.

The government had previously estimated that a total of 11 trillion yen would be needed to cover the projects -- 5.4 trillion yen for nuclear damage compensation, 2.5 trillion yen for decontaminating areas affected by the nuclear disaster, 1.1 trillion yen for building interim storage facilities for radiation contaminated soil and 2 trillion yen for decommissioning reactors at the Fukushima No. 1 nuclear plant.

In the latest estimate, the compensation cost is expected to surge to roughly 8 trillion yen and the decontamination cost is estimated at somewhere around 4-5 trillion yen. It is also highly likely that the decommissioning cost would spike by several trillion yen. The development cost for interim storage facilities remains unchanged.

The previous government estimate was calculated toward the end of 2013, but the coverage of nuclear damage compensation has since increased and decontamination efforts are taking longer than expected. The decommissioning cost has also expanded especially for work to salvage nuclear fuel debris from the 2011 meltdowns. The ministry had earlier projected that the yearly cost for these projects would reach hundreds of billions of yen from the current 80 billion yen.

The government had heretofore explained that: the compensation cost would be temporarily paid by the Nuclear Damage Compensation and Decommissioning Facilitation Corp. (NDF) before being covered by TEPCO and other major utilities; the decontamination cost would be covered by the government after it sells the TEPCO shares that it owns; revenue from the power resources development promotion tax would be used for the construction of interim storage facilities; and the reactor decommissioning cost would be secured by TEPCO.

The government is now looking into boosting the amount temporarily covered by the NDF, while tacking the snowballing compensation cost onto major utilities and new power providers that use power grids operated by existing power transmission companies. The power grid usage fees, which require government approval, are ultimately to be passed on to consumer electricity bills.

As it is highly likely that the proceeds from the sale of TEPCO shares are too small to cover the decontamination cost, the government is mulling demanding TEPCO and other utilities share the financial burden. In that case, the expenses may likely be passed onto electricity bills.

The government will consider establishing a system in which TEPCO accumulates funds through business streamlining efforts to cover the decommissioning cost. As it is widely deemed difficult to cover the cost only through management efforts, however, the expenses may likely be -- again -- tacked onto power bills.



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