Nuclear industry amalgamation mulled

LDP examining idea to bring all reactors under one company

Bloomberg

The government is discussing a radical overhaul of the nuclear power sector that would combine the nation’s 50 operating reactors into a single company to rebuild an industry that’s been effectively halted by the Fukushima disaster that started in March 2011.

The company would be owned by the nine regional utilities, along with wholesalers Japan Atomic Power Co. and Electric Power Development Co., while the government and reactor makers would give financial and technical support, Taku Yamamoto, who chairs the Liberal Democratic Party’s energy committee, said in an interview.

Part of the profit from sales of the new company’s electricity would be funneled toward the cleanup of the Fukushima No. 1 power plant and victim compensation, which combined may cost more than ¥11 trillion. The plan would keep Tokyo Electric Power Co. alive to shoulder Fukushima costs.

“The plan is based on Tepco’s profits covering Fukushima costs without taxpayers’ money and to increase the government’s role in the nuclear industry,” Yamamoto said. “Who’s going to like a bankruptcy of Tepco? The company has to go on working hard for the Fukushima disaster until it dies.”

Setting up a comprehensive nuclear-management company should help Japan expand its exports of reactors and operation skills as domestic electricity demand slows, Yamamoto said.

Tepco spokesman Tsuyoshi Numajiri declined comment on lawmakers’ discussions about spinning off nuclear operations at utilities, saying such plans are subject to change.

Discussions of such a dramatic overhaul of Japan’s nuclear industry — the third-biggest in the world — signal growing momentum in the government to restructure an electricity supply model that helped rebuild the economy after World War II, only to be exposed by safety lapses that culminated in the Fukushima disaster.

All 50 reactors have been shut down since Kansai Electric Power Co. turned off units 3 and 4 at its Oi plant in Fukui Prefecture in September for regular safety checks.

None of the idled reactors may be restarted by the end of March 31, as preparations by power companies for the Nuclear Regulation Authority’s safety review are behind schedule, the Sankei Shimbun reported Monday.

LDP lawmakers have discussed other options to restructure Tepco. Tadamori Oshima, head of the party’s 2011 quake reconstruction task force, proposed to Prime Minister Shinzo Abe that Tepco form a separate company to deal with decommissioning Fukushima No. 1 and the government provide financial aid, Kyodo News reported Sept. 21.

The Abe administration is seeking the Diet’s endorsementthis month for a bill designed to end the 60-year-old monopolies of the regional utilities, led by Tepco.

The other entities — which like Tepco dominate electricity generation and transmission in their respective regions — are Hokkaido Electric Power Co., Tohoku Electric Power Co., Chubu Electric Power Co., Kansai Electric, Hokuriku Electric Power Co., Chugoku Electric Power Co., Shikoku Electric Power Co. and Kyushu Electric Power Co.

The draft bill would unbundle generation and transmission operations and allow households to choose power suppliers for the first time. In theory, 60 percent of the electricity market has been deregulated, though in practice the dominance of the regional utilities stands in the way.

The regional utilities produced 90 percent of the nation’s electricity output in the year that ended March 31, Ministry of Economy, Trade and Industry data show.

“The power industry reform bill would help stop utilities’ dominance in Japan and encourage more newcomers from home and abroad to enter the mature power market,” Yamamoto said.

“The passage of the legislation is a prerequisite for the unification of nuclear plant management to move forward,” said Yamamoto, who has studied Japan’s nuclear power industry for three decades and chairs the LDP’s committee to discuss strategic natural resources and energy policy.

Tepco should sell all its power-generating assets, including the gigantic Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture, and reshape itself as an electricity transmission and distribution company, according to Takeo Kikkawa, a commerce professor at Hitotsubashi University.

“A breakup of Tepco would create a wave of asset sales in the greater Tokyo power market as Japanese oil refiners and gas companies are expanding power-generation business to diversify their business portfolios,” said Kikkawa. “It’d be a time of big mergers and acquisitions in the power industry in years ahead.”

  • douglas black

    There is no profit with nuclear energy. How can that be funneled? Nuclear energy is not cheap. That is a hoax. How many years of maintenance & how much money does it cost to turn one ‘off’?

    • Starviking

      Really, no profit? I wonder why compainies around the world are still operating and building nuclear power plants then?