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Gov't must not evade responsibility- What structure for TEPCO?

November 9, 2013

Editorial: Failure of nuclear power policy shows Japan must get rid of all nuke plants

 

http://mainichi.jp/english/english/perspectives/news/20131109p2a00m0na004000c.html

 

The government's unreasonable policy of forcing a private electric power company to pay the full costs of dealing with a nuclear plant accident while promoting atomic power has come to a deadlock. The government should review its nuclear power policy and draw up a blueprint for a society that will not depend on such an energy source.


The ruling coalition comprised of the Liberal Democratic Party (LDP) and New Komeito is set to propose to Prime Minister Shinzo Abe that the government speed up efforts to bring the crisis at the tsunami-hit Fukushima No. 1 Nuclear Power Plant under control and restore areas affected by the disaster.


Specifically, the coalition will call for the use of taxpayers' money to build a temporary storage facility for soil contaminated with radioactive substances, to decontaminate areas affected by the disaster and to treat radioactively contaminated water accumulating at the Fukushima No. 1 Nuclear Power Plant. The total amount of money that the government is expected to pay is likely to amount to several trillion yen. The executive branch of the government will consider complying with the recommendation by the coalition. The move represents a departure from the government's policy of requiring Tokyo Electric Power Co. (TEPCO), the operator of the plant, to foot all the costs of dealing with the nuclear disaster.


The ruling coalition's proposal reflects its serious sense of crisis over the current situation in which work to restore areas hit by the nuclear crisis has been delayed.


The prime minister has said ensuring Fukushima's recovery from the disaster is the top priority for his government. Nevertheless, the government had been reluctant to play an active role in dealing with the nuclear disaster because it was unsure of how much such efforts would cost taxpayers. As a result, work to treat contaminated water has been delayed and little progress has been made on the restoration of nuclear disaster-hit areas.


It is obvious that work to deal with the meltdowns should not be left entirely to TEPCO. The government that has promoted nuclear power and actively helped power companies secure land and construction costs for nuclear plants must not evade its responsibility. The use of taxpayers' money is inevitable.


Since the government is set to use taxpayers' money, it must not repeat the mistakes of the past. In other words, the government needs to admit that its nuclear power policy was wrong and fundamentally review it. Electric power companies are required to shoulder unlimited liabilities for accidents at nuclear plants they operate under the Act on Compensation for Nuclear Damage. However, even TEPCO, the largest company in the industry, cannot fully shoulder the costs of dealing with the disaster.


Still, the problem will never be solved even if an upper limit is to be set on utilities' liabilities for nuclear accidents because such a measure would require the government to bear the costs beyond the upper limit. In other words, it is inevitable for taxpayers to shoulder a huge amount of financial burden once a serious accident occurs at an atomic power station.


Electric power firms are forced to operate thermal power plants powered by natural gas and oil at full capacity to make up for the loss of nuclear power, costing the utilities more than 3 trillion yen in extra fuel expenses a year. Those in favor of nuclear power say nuclear fuel is far less expensive than fossil fuels as one of the reasons why they are promoting atomic energy. The cost-effectiveness of power generation cannot be ignored in Japan, which is beginning to show signs of overcoming its longstanding deflation as a result of "Abenomics," economic policies promoted by Prime Minister Abe.


However, the promotion of nuclear power was based on the myth of the infallible safety of nuclear plants. Since that safety myth has collapsed, nuclear plants have lost their edge even in terms of cost-effectiveness.


Such being the case, the government should eliminate nuclear power stations as quickly as possible while developing and introducing substitute energy sources, such as renewable energy, and promoting energy-saving measures. The government needs to draw up a clear road map toward that end.


The proposal that the LDP-New Komeito coalition will make shortly calls for the use of public funds to build infrastructure to support Fukushima's disaster recovery. This suggests that the coalition intends to fend off criticism from the public that taxpayers would be forced to shoulder the costs of bailing out TEPCO. However, the responsibility of TEPCO, which caused such a serious accident as a result of making light of safety measures, is extremely grave. If public funds were used solely to bail out TEPCO, the measure would never win the public's understanding.


Critics insist that TEPCO be liquidated as a precondition for an injection of public funds. Of course, ordinary businesses would be liquidated in such a case because it would be unreasonable to use taxpayers' money before their creditors -- including shareholders and financial institutions that buy the firms' bonds or extend loans to them -- assume their own responsibility for their failures.


However, electric power companies operate under special circumstances. They need to issue corporate bonds to raise massive amounts of funds to make investments in facilities including nuclear plants. Therefore, priority is placed on utilities' redemption of their bonds under legislation in case they go under. No one can foresee how far TEPCO's debts will snowball.


In explaining at a recent Diet session why the government will not liquidate TEPCO, Economy, Trade and Industry Minister Toshimitsu Motegi expressed concern that priority could be placed on the protection of investors who hold TEPCO bonds over compensation payments to disaster victims, which could delay the decommissioning of the Fukushima reactors and countermeasures against contaminated water. The ruling coalition's proposal is based on the assumption that TEPCO will not be liquidated.


Still, calls persist within the ruling coalition urging the utility be liquidated. If the government could not persuade opponents within the coalition, use of taxpayers' money to deal with the disaster would never win support from the public. If the government intends to avoid liquidating TEPCO, it must provide a thorough explanation to convince taxpayers.


Furthermore, the government should demand TEPCO drastically reform its management in an effort to win the public's understanding for the use of public funds. TEPCO claims that it has streamlined its operations more thoroughly than required by its corporate rehabilitation plan endorsed by the government. Still, the government's Board of Audit has pointed out that the utility has wasted some money in procuring materials and equipment. Moreover, TEPCO should consider disposing some of its assets. The utility needs to be fully aware that it has come under pressure to thoroughly streamline its operations.


The ruling coalition's proposal also suggests that TEPCO can either split its division specializing in decommissioning nuclear reactors or transform itself into an independent administrative agency.


In reforming itself, however, TEPCO must aim to maintain the morale of workers struggling to bring the nuclear crisis under control and make steady progress in the work, as well as step up the streamlining of its operations to the extent that it will not sacrifice the safety of its nuclear plants in an effort to lessen the financial burden on taxpayers. Moreover, TEPCO must secure a stable supply of electric power.


To that end, it is necessary to consider the most appropriate management structure of the company.

 

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