The operator of the nuclear power plant destroyed in the Fukushima disaster five years ago has asked Japan’s government for help in avoiding the risk of the utility going bankrupt should there be a sharp rise in the full estimated clean-up costs.
Tokyo Electric Power Co Holdings Inc didn’t specify what kind of help it was seeking, but people familiar with the matter said Japan’s biggest utility is looking for new rules to avoid having to book a huge loss in its accounts if it is estimated that there will be big cost overruns for decommissioning the power station.
“We don’t want to receive national rescue measures but want to bear the Fukushima responsibility ourselves,” Tepco president Naomi Hirose told a government panel, according the panel chief, Kunio Ito, a professor at Hitotsubashi University.
“For that reason, we would like to undertake steps for a further overhaul than we have had so far,” Hirose was quoted as saying.
In March 2011, one of the worst earthquakes in history triggered a 10-metre high tsunami that crashed into the Fukushima Daiichi nuclear power station, causing the world’s worst nuclear accident since Chernobyl 30 years ago. Meltdowns in three reactors released radiation over a wide area, contaminating water, food and air, and forcing more than 160,000 people to evacuate.
Dismantling the reactors is expected to take about 40 years, but even five and a half years on, Tepco still struggles to contain radioactive water from the plant and has said it can’t predict the eventual total costs of the clean-up and decommissioning.
After the panel meeting on Tepco reform and the Fukushima Daiichi plant, Hirose told reporters that it was difficult to accurately predict the costs of even a gradual decommissioning of the crippled reactors, said a spokeswoman for the utility, which generates about a third of the country’s electricity.
“If the issue of recognising all the estimated losses at once were to emerge, our company would fail, so we would like some structural assistance from the government to be able to avoid that risk,” Hirose said.
Tepco wants the government to consider introducing rules to avoid having to book a single huge exceptional loss as soon as cost estimates for decommissioning become clearer, said a person familiar with the situation.
Cost estimates could shoot up when the company and the government, which owns 50.1 percent of Tepco, decide on how to extract fuel debris at the plant in 2018 or 2019, said a person with direct knowledge of discussions on restructuring Tepco.
A government official familiar with the deliberations said, “In the event that Tepco can’t shoulder the burden, it will mean changing the fiscal-support system.” As it’s hard to imagine the government letting the company go bust, “in the end it will have to be a matter of either shouldering the burden with public funds or responding by raising electricity prices.”
The Mainichi newspaper said on Wednesday that Japan’s utilities lobby expects clean-up and compensation costs from the Fukushima disaster to overshoot previous estimates by 8.1 trillion yen ($79 billion).
The Federation of Electric Power Companies of Japan has informally asked the government to shoulder the extra cost, the newspaper said.
However, a federation spokesman said the group has not asked the government to shoulder any extra costs and the Mainichi estimates were not correct.
The new government panel also agreed that management reform at Tepco was necessary at its first meeting earlier in the day, panel chief Ito said.
Shares in Tepco ended down 3.3 percent after falling as much as 7.9 percent on Hirose’s remarks, which were initially interpreted as a plea for additional financial aid.
“The stock market seems to have reacted to the headline that it could become insolvent,” said a credit analyst at a Japanese brokerage. “But in reality, the president has just said what’s been known, that they need an accounting system that allows them to write off the cost of decommissioning gradually because posting the cost all at once could make it insolvent.”