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Taxpayers to foot the bill?

August 8, 2013


ANALYSIS: Taxpayers hit as framework to resolve Fukushima crisis hits wall




Tokyo Electric Power Co.’s continuing futility in resolving the Fukushima nuclear crisis is threatening to unravel the government's framework for dealing with the disaster.

Radioactive water continues to spill into the ocean from the site of the Fukushima No. 1 nuclear plant, and the government is now being forced to change course and inject public funds to help deal with the water problem.

However, with no end in sight to the Fukushima nuclear crisis and with costs piling up, taxpayers could end up footing the enormous bill for the entire decommissioning process.

After the disaster started in March 2011, the government created a framework under which TEPCO pays for compensating disaster victims, decontaminating affected areas and decommissioning the crippled reactors. The government’s stance holds the utility responsible for resolving the accident—without the use of taxpayer money.

That framework is now running into the wall.

TEPCO says the company is doing everything within its power at the nuclear plant site. But it has been able to take only stopgap measures to contain the ever-increasing amount of radioactive water.

At a meeting of the Nuclear Emergency Response Headquarters on Aug. 7, Prime Minister Shinzo Abe instructed industry minister Toshimitsu Motegi to speed up steps to contain the radioactive water at the Fukushima plant.

The government plans to shoulder part of the estimated tens of billions of yen required to surround the reactor and turbine buildings with an underground wall of frozen soil to prevent groundwater from flowing into the facilities.

The industry ministry will include the costs in a fiscal 2014 budget request, without specifying an amount. The funding--technically--will not break away from the existing framework.

“We cannot disburse money that will support TEPCO,” a senior industry ministry official said. “We have no other choice but to make a request in the name of research and development.”

Under the framework, TEPCO mainly uses revenue from electricity charges for the decommissioning work, including disposal of radioactive water.

For compensation and decontamination, the utility can borrow up to 5 trillion yen ($52 billion) from the government-backed Nuclear Damage Liability Facilitation Fund. But it must pay back the amount.

The costs for compensation and decontamination are estimated to total 10 trillion yen, double the credit line from the state-backed fund.

In a meeting with Abe in April, TEPCO Chairman Kazuhiko Shimokobe and other executives asked for greater state involvement.

“The government wants to take a step forward and work with TEPCO on the challenges the company faces and for the reconstruction and rehabilitation of Fukushima,” Abe said.

But the government has remained cautious about injecting taxpayer money.

“We cannot bear the costs for decommissioning,” a senior Finance Ministry official said. “We will closely examine whether a line is drawn.”

It remains unclear if the government will create a new framework under which it will take responsibility for decommissioning the plant, compensation and decontamination by spending taxpayer money.

If the current framework is maintained, the government may raise the amount of loans available from the state-backed fund and allow TEPCO to further increase electricity rates to secure more funds.

The nuclear crisis will not be brought under control if makeshift measures continue without deciding who will shoulder the costs for dealing with the accident.

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