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Tepco’s survival tied to reactors, rate hikes

Utility will have to draft new business plan if restarts nixed

JIJI

Tokyo Electric Power Co. said it will be difficult to return to the black in fiscal 2013 without restarting its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture or hiking prices again.

The beleaguered utility’s restructuring plan is based on the assumption that the six reactors at the Kashiwazaki-Kariwa power station, the world’s largest nuclear plant, will be brought back online next fiscal year, which starts April 1.

Tepco President Naomi Hirose said that even after installing the new plan and radically cutting procurement costs, profitability will be “extremely difficult without restarting nuclear reactors.”

The company intends to review its restructuring plan after the House of Councilors election this summer. If the plant is still in limbo by the time the review process begins, Tepco will have no other method of raising funds other than rate hikes, government officials said.

The utility received a ¥1 trillion state bailout last July and raised household electricity rates in September to shore up its financial base and cover the huge compensation payments linked to the nuclear disaster at the Fukushima No. 1 plant, costs related to keeping the crippled facility under control and to decommissioning.

To bolster its chances of gaining approval for restarts at Kashiwazaki-Kariwa, Tepco began work in January to ensure compliance with safety standards reissued by the new Nuclear Regulation Authority.

The safety inspections by the Niigata Prefectural Government’s technical committee have been making progress, Tepco said.

Many in the energy industry expect the facility’s light-water reactors to be the first of their kind to resume operations.

After all of the nation’s reactors were idled in light of the core meltdowns in Fukushima in March 2011, the only two units reactivated so far have been at Kansai Electric Power Co.’s Oi power station in Fukui Prefecture.

But winning local support will be tough, as Niigata Gov. Hirohiko Izumida is wary of restarting Kashiwazaki-Kariwa. If Tepco is denied approval to fire up the plant, it will have to radically revise the management plan to cover the resulting shortfall in revenue, analysts say.

In November, Tepco set up a panel of outside experts to oversee and help carry out a fundamental review of its procurement costs, aiming to slash them by more than ¥4 trillion over the next 10 years. The move came after the Ministry of Economy, Trade and Industry last July trimmed by nearly 2 percent Tepco’s formal request to hike household rates by 10.28 percent. The 8.47 percent increase took effect Sept. 1.