Kyushu Electric Power Co. has become the second utility to seek government support this week as reactors across the country remain idled and industry losses mount three years after the Fukushima nuclear disaster.
Kyushu Electric said Wednesday it was in talks with the government-owned Development Bank of Japan for financial backing. On Tuesday, a source said Hokkaido Electric Power Co. had also asked the bank for financial assistance.
All of the country’s 48 nuclear reactors have been shut down, pending stringent safety checks, in the wake of the catastrophe at the Fukushima No. 1 power plant.
With no schedule for nuclear reactor restarts, utilities have been forced to burn expensive fossil fuel for power generation. They are set to report a third year of annual losses.
“We are in consultations with the Development Bank of Japan about receiving capital support, but since nothing has been decided I am unable to comment further,” Kyushu Electric spokesman Yuki Hirano said.
The utility is asking the bank to buy ¥100 billion in preferred stock in the company, a source said. The lender is considering the request, which was reported earlier by the Nikkei business newspaper.
If both Kyushu Electric and Hokkaido Electric receive aid, they would join the stricken Fukushima plant’s operator, Tokyo Electric Power Co., in receiving government bailouts. Other nuclear operators may be forced to turn to the government, the Nikkei said Tuesday.
In 2012, the government took a controlling stake in Tepco. The company still relies on constant taxpayer handouts to pay compensation to those affected by the nuclear disaster, which forced 160,000 people from their homes.
Kyushu Electric has estimated a net loss of ¥125 billion for the year that ended March 31.
Banking practices make it difficult for lenders to extend credit, including refinancing existing loans, to companies that post three consecutive years of losses.
Six of nine regional monopolies that operate nuclear reactors nationwide have raised prices in the wake of the Fukushima crisis, while one, Chubu Electric Power Co., has a request to lift rates under review. Price increases for residential customers must be approved by the government.
The nuclear regulator has placed two of Kyushu Electric’s reactors on a shortlist for final safety checks, leading to speculation these units may be the first to be restarted.
Prime Minister Shinzo Abe is moving to revive nuclear power as a core part of the nation’s energy mix, but many of the idled reactors will never be restarted.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.