Decommissioning made easier for utilities

October 1, 2013

New accounting rules make axing reactors cheaper

Kyodo

http://www.japantimes.co.jp/news/2013/10/01/business/new-accounting-rules-make-axing-reactors-cheaper/#.Ukq901M0_9k

The government revised accounting rules Tuesday for utilities to prevent their business from deteriorating abruptly if they decommission nuclear reactors earlier than planned.

Power firms are required to set aside reserves for scrapping each of their reactors while they are still in service. The new rules allow them to continue to recoup the funds through electricity rates for up to 10 years beyond the end of a reactor’s operational life.

According to an industry ministry official, the rules are likely to be first applied to reactors 5 and 6 of the Fukushima No. 1 complex, which the government recently urged Tokyo Electric Power Co. to scrap in addition to the stricken reactors 1 to 4.

Decommissioning a 1.1 million kw-class atomic unit costs an estimated ¥57 billion to ¥77 billion, the official said.

Under the previous rules, decommissioning funds had been set aside on the assumption that a reactor would be used over a period of 40 years or longer. An operator would have had to post an extraordinary loss if it faced a shortfall in the funds when shutting down a reactor earlier than planned.

The rule change, however, now enables an operator to avoid booking a large extraordinary charge in a single year by extending the period for collecting the decommissioning funds.

The depreciation cost of certain equipment, such as reactor containment vessels, is also permitted to be booked beyond the end of the unit’s operation.

The rules have been revised because the Nuclear Regulation Authority introduced new regulations July 8, which could lead utilities to give up on restarting some of their reactors rather than investing in costly safety measures to meet the new standards compiled in view of the 2011 Fukushima meltdowns.

The nation now has a total of 50 commercial reactors, excluding units 1 to 4 at Fukushima No. 1 that Tepco is struggling to keep stable for decommissioning. More than 10 reactors are currently being checked over whether they are safe enough to resume operation.