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"Could be hit hard ... financially"

INSIGHT: NRA finding puts Japan Atomic Power on cusp of crisis

http://ajw.asahi.com/article/behind_news/social_affairs/AJ201305160063

 

THE ASAHI SHIMBUN


A finding that an active fault line runs directly underneath the No. 2 reactor of the Tsuruga nuclear power plant in the western Japan prefecture of Fukui could deal a fatal blow to plant operator Japan Atomic Power Co., which may be forced to shut the facility permanently.


The conclusion, made in a report issued May 15 by an expert panel of the Nuclear Regulation Authority, could also have widespread ramifications for other major electric power companies.


This is because Japan Atomic Power is financed by the nation’s nine leading utilities, which all operate nuclear power plants. If Japan Atomic Power goes bust, they, too, could be hit hard financially.


The report is expected to be approved by the NRA on May 22. This means Japan Atomic Power will almost certainly be required to decommission the No. 2 reactor, which is currently idle. It will mark the first time in Japan that the country’s nuclear watchdog has refused to approve the restart of a nuclear reactor.


On the evening of May 15, Japan Atomic Power held a news conference to contest the finding.


Its president, Yasuo Hamada, expressed strong indignation on grounds that “discussions based on scientific data were not held” by the NRA’s expert panel.


“It is not necessary to decommission the reactor,” he added.


Japan Atomic Power intends to release the results of its own studies in early July to show that the fault under the No. 2 reactor is not active.


If the Nuclear Regulation Authority pays no heed to the report, Japan Atomic Power could file a lawsuit against the NRA.

“Even if Japan Atomic Power cannot overturn the NRA’s conclusion, it will dispute the finding, saying, ‘If we take appropriate safety measures, we can restart the No. 2 reactor,’” said an electric power industry source.


Decommissioning of the No. 2 reactor would not only endanger Japan Atomic Power’s management, but also affect the entire electric power industry.


Japan Atomic Power stands to suffer a financial loss of 100 billion yen ($1 billion) if it is forced to decommission the No. 2 reactor.


As an asset, the reactor would have zero value. Also, the company would have to shoulder unseen costs for decommissioning in addition to the amount already reserved for that work.


Japan Atomic Power operates two other reactors: the No. 1 reactor at the Tsuruga plant and the single reactor at the Tokai No. 2 nuclear power plant in Ibaraki Prefecture.


However, Japan Atomic Power faces high hurdles in trying to restart them. The No. 1 reactor at Tsuruga has already exceeded the 40-year span for safe operations. It began operating in 1970. Also, reactivating the Tokai No. 2 plant faces strong opposition from local residents.


If these two reactors are also decommissioned, Japan Atomic Power’s losses will likely to swell to 250 billion yen, which would wipe out the company’s net assets of about 160 billion yen, including capital. The company would not be able to recover the loss even if it sold off all assets.


If the company’s deficits exceeds its assets, Japan Atomic Power’s management will become untenable.

In 1957, the nation's main electric power companies jointly established Japan Atomic Power to promote nuclear power generation. At that time, they provided the capital to start the company.


At present, 90 percent of the company’s capital--120 billion yen--is covered with funds from nine major electric power companies, except for Okinawa Electric Power Co.


If the Japan Atomic Power’s management plunges into crisis, those electric power companies will be required to offer the appropriate financial support. The huge outlays required for decommissioning could severely damage those companies’ bottom lines.


In addition to the No. 2 reactor at Tsuruga, NRA also plans to check five other sites. One of them is the No. 1 reactor at the Shika nuclear power plant in Ishikawa Prefecture, which is operated by Hokuriku Electric Power Co.


Several experts have already pointed out that an active fault likely run directly below the building housing the reactor. If the NRA concludes that the fault is indeed active, the No. 1 reactor cannot be restarted.


The other four sites are the Oi and Mihama nuclear power plants, also in Fukui Prefecture and operated by Kansai Electric Power Co.; the Monju prototype fast-breeder reactor in Fukui Prefecture, which is operated by Japan Atomic Energy Agency; and Tohoku Electric Power Co.’s Higashidori nuclear power plant in Aomori Prefecture.


Experts have also said that all four sites appear to have been built atop active faults. They, too, will remain shut down permanently if that is the case.


Of Japan’s 50 reactors, 10 have been operated for more than 35 years. The NRA says that, in principle, nuclear reactors that have been operated for more than 40 years should be decommissioned.


In instances where the NRA approves an extension beyond the 40-year period, operators will be obliged to adopt stricter safety measures.


In 2012, the Ministry of Economy, Trade and Industry said that if all 50 nuclear reactors in Japan are decommissioned, electric power companies will suffer a combined loss of 4.4 trillion yen.


Of those companies, Hokkaido Electric Power Co., Tohoku Electric Power, Tokyo Electric Power Co. and Japan Atomic Power would find their deficits exceed their assets.


The nation’s nuclear power plants were shut down in the aftermath of the Fukushima nuclear disaster triggered by the March 11, 2011, Great East Japan Earthquake. Currently, only two nuclear reactors are operating.


(This article was written by Mari Fujisaki and Takashi Ebuchi.)

 

May 16, 2012

 

Troubled Tsuruga reactor could force utilities to shoulder enormous financial burdens

http://mainichi.jp/english/english/newsselect/news/20130516p2a00m0na016000c.html

 

The utility companies that hold major stakes in Japan Atomic Power Co. could be forced to shoulder enormous financial burdens if JAPC were to collapse due to the possible shutdown and decommissioning of the No. 2 reactor at its Tsuruga Nuclear Power Plant in Tsuruga, Fukui Prefecture.


A panel of experts appointed by the Nuclear Regulation Authority concluded on May 15 that the No. 2 reactor at the Tsuruga nuclear power station in western Japan is located right above an active fault that could undermine its safety, increasing the likelihood the unit would be shut down permanently. The power companies, major shareholders of JAPC, have already decided to extend support to JAPC until April next year, but there are no viable plans yet to restore its finances.


In the case of ordinary bankruptcies, shareholders' losses are limited to the amounts of their investments. But of all the power companies that buy electricity from JAPC, four -- Kansai Electric Power Co., Chubu Electric Power Co., Hokuriku Electric Power Co., and Tohoku Electric Power Co. -- guarantee JAPC's debts totaling about 100 billion yen. Therefore, if JAPC cannot repay its debts, the four power companies will be forced to shoulder them.


Furthermore, JAPC puts aside money for future costs to reprocess spent nuclear fuel and decommission its nuclear reactors, but if the company goes bankrupt, the accumulated funds will certainly run short. A senior government official said, "There is a possibility that the power companies will have to shoulder a total of 500 to 700 billion yen." That would further upset the power companies that have already incurred heavy losses due to higher fuel costs as a result of the shutdown of their nuclear reactors.


For this reason, "The private sector alone cannot handle the costs," said a senior power company official. Therefore, the utility companies have been negotiating with the government behind the scenes to reduce their financial burdens for decommissioning their nuclear reactors and other costs. But the government has been cautious about fresh fiscal support measures that will require the public to shoulder extra financial burdens.


As long as the utility firms' financial support helps keep JAPC running, JAPC, which insists on reactivating the No. 2 reactor at the Tsuruga plant, and the Nuclear Regulation Authority will likely continue to square off. But some utility firms say that they are barely managing their own finances. Due also in part to a backlash from users, it remains to be seen whether the power companies will be able to extend financial support to JAPC beyond April next year. In the end, the public may have to shoulder the costs of decommissioning the reactor and other expenses.


Tokyo Electric Power Co. holds a 28.23 percent stake in JAPC, while Kansai Electric has 18.54 percent, Chubu Electric 15.12 percent, Hokuriku Electric 13.05 percent, Tohoku Electric 6.12 percent, Electric Power Development Co. 5.37 percent, Kyushu Electric Power Co. 1.49 percent and Chugoku Electric Power Co. 1.25 percent.

 

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