The government is weighing measures to aid power companies that decommission aging nuclear power plants and host municipalities that will lose nuclear power-related revenue. To facilitate the moves to scrap aging plants, some steps may be necessary to ease the process. But support should not be extended in ways that perpetuate the reliance of the power firms and the host municipalities on nuclear power.

Under safety regulations tightened after the March 2011 meltdowns at Tokyo Electric Power Co.’s Fukushima No. 1 nuclear power plant, utilities are not allowed in principle to run nuclear power reactors for longer than 40 years. The operators can seek to extend reactor operations for up to 20 years, but they need to undergo special inspections by the Nuclear Regulation Authority, which would require huge investments to upgrade aging equipment to beef up their safety.

Of the 48 nuclear power reactors in Japan, four — the No. 1 reactor at Japan Atomic Power Co.’s Tsuruga plant, the Nos. 1 and 2 reactors at Kansai Electric Power Co.’s Mihama plant and the No. 1 reactor at Chugoku Electric Power Co.’s Shimane plant — have already been in operation for more than 40 years, while three others — Nos. 1 and 2 reactors at Kansai Electric’s Takahama plant and the No. 1 reactor at the Genkai plant of Kyushu Electric Power — will reach the 40-year mark in July 2016.

The power firms need to apply to the NRA by next summer if they want to extend the reactors’ operation. The utilities are said to be considering the choice of decommissioning the aging reactors, which typically have small output capacity and are unlikely to churn out profits that match the massive cost of renovation.

The government is ready to facilitate the move, apparently on the belief that scrapping aging reactors will help win public support for reactivating other reactors that were put offline after the Fukushima disaster. While urging the power companies to make swift decisions, the government has kicked off discussions on measures to support the moves by the utilities.

Decommissioning a nuclear power reactor takes 20 to 30 years. In addition to the direct cost of scrapping the reactor, there will be other expenses such as those for disposing of the large amount of radioactive waste.

While the utilities have set aside reserves to pay for future decommissioning by adding the cost on to electricity bills, moving forward schedules for scrapping reactors due to new safety regulations will require additional expenses. The power companies also need to devalue the reactors once they are decommissioned and report the losses.

Local governments hosting the nuclear power plants stand to lose national government grants to such municipalities as well as revenue from fixed asset taxes on the reactors to be decommissioned. There are concerns about severe damage to local economies from the cuts of such revenue, along with losses to related businesses.

Under discussion at a panel of the trade and industry ministry are measures such as changing accounting rules that currently require the power companies to report losses on the reactors immediately after decommissioning them, as well as maintaining government financial support for the host municipalities even after the reactors have been scrapped.

Also reportedly under consideration is a system that will include in the price of electricity generated by nuclear power the total power generation costs — including the expenses of future decommissioning of reactors and disposal of spent fuel — even after the retail sale of power is fully deregulated.

The decommissioning of reactors that are aging and more vulnerable to severe accidents or natural disasters should be promoted, and steps will need to be taken to eliminate hurdles, including financial concerns, that deter such moves. But the steps need to be limited to temporary measures that ease the financial burden on the power firms and host municipalities.

Preferential treatment toward nuclear power that could encourage the utilities to keep relying on it as a source of commercial electricity, as well as policies that keep the local economies depending on the nuclear power industry, will run counter to the government’s pledge in its latest basic energy plan to reduce “as much as possible” the nation’s reliance on nuclear power, and therefore must be avoided.

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