Tokyo Electric Power Co. and other utilities are taking a huge gamble by providing hundreds of billions of yen (billions of dollars) to restart an aging nuclear power plant in need of safety upgrades.
Japan Atomic Power Co. intends to resume operations of the one reactor at the Tokai No. 2 nuclear plant in Ibaraki Prefecture in January 2023, but 300 billion yen–nearly double the initial estimate–is reportedly needed to ensure its safety.
TEPCO, which will be provided with electricity from the Tokai plant, will offer 190 billion yen, or two-thirds of the total cost. Tohoku Electric Power Co., Chubu Electric Power Co., Kansai Electric Power Co. and Hokuriku Electric Power Co. will also offer financial support.
But it remains unclear whether municipalities around the plant will approve the plan to restart the reactor.
If Japan Atomic Power fails to win consent from the local governments and is forced to scrap the Tokai No. 2 plant, TEPCO and other power distributors could suffer big financial losses.
TEPCO was effectively turned into a state property after the crisis unfolded at the Fukushima No. 1 nuclear power plant in March 2011. With taxpayers’ money injected into it, TEPCO’s plan to offer assistance to another operator’s nuclear facility that has no clear prospects of restarting will inevitably provoke controversy.
Japan Atomic Power initially estimated safety improvement costs for a levee to block tsunami and other measures at 174 billion yen.
But the estimate has soared partly because of anti-terrorism equipment needed following the plant’s restart.
Under Japan Atomic Power’s recently released plan, an estimated 120 billion yen is needed between April 2019 and late 2022 in preparation for the plant’s restart.
TEPCO, which will buy 80 percent of the electricity generated at the plant, will cover the same percentage of the expenses, or 96 billion yen.
Tohoku Electric will cover the remaining 24 billion yen, or 20 percent of total cost, based on its ratio of power supplied from the plant.
TEPCO is expected to use bank loans to provide “up-front payments” to Japan Atomic Power for electricity sent from the Tokai No. 2 plant.
Tohoku Electric has yet to decide whether to adopt TEPCO’s strategy or offer support through the loan guarantee system.
Between January 2023 and March 2024, following the planned restart, an estimated 180 billion yen will be needed to operate the plant. Japan Atomic Power will borrow the funds from banks.
TEPCO will guarantee 96 billion yen of the debt, while Tohoku Electric will guarantee 24 billion yen, and Chubu Electric and other two utilities will guarantee 60 billion yen.
Although Kansai Electric, Chubu Electric and Hokuriku Electric do not receive power from the Tokai No. 2 plant, they will provide assistance, emphasizing that they used to get electricity from the No. 2 reactor at Japan Atomic Power’s Tsuruga nuclear plant in Fukui Prefecture.
The Tsuruga No. 2 reactor, whose operations have been suspended, sits directly above an active fault, so it will be difficult to bring the reactor back online.
The three companies’ assistance for the restart of the Tokai No. 2 plant could draw criticism from their shareholders.
“It is difficult to find a reason for offering support as we will not receive electricity from it,” an insider said. “The move may result in shareholders’ filing a lawsuit against the companies’ management.”
With two of its four reactors being decommissioned, Japan Atomic Power is struggling financially. The reactor at the Tokai No. 2 plant is the only one with prospects of going online.
Japan Atomic Power has not produced any power recently except for immediately after the accident at the Fukushima No. 1 plant. It is barely surviving on annual basic charges totaling 100 billion yen from TEPCO and four other companies that had concluded power supply contracts with it.
If the Tokai No. 2 plant is decommissioned, Japan Atomic Power would be at greater risk of going under, causing severe losses for utilities that have invested in the company.
That is why the utilities are considering extending a helping hand to Japan Atomic Power.
REMAINING UNCERTAINTY, HIGH RISKS
The Tokai No. 2 nuclear plant, which has operated for more than 40 years, passed tougher safety standards in September last year. And in November, the plant was given permission to extend the reactor’s operational life by 20 years.
Japan Atomic Power announced on Feb. 22 its intention to resume operations at the plant.
However, the 2011 earthquake and tsunami caused the loss of outside power sources and an emergency power generator to stop at the Tokai No. 2 plant.
Many locals still oppose the restart of the reactor.
Anti-nuclear sentiment was further fueled when Japan Atomic Power set the restart time for January 2023 without holding sufficient talks with the local municipalities.
Six municipalities near the Tokai No. 2 plant have argued that Japan Atomic Power should gain their consent before the reactor restart. However, Japan Atomic Power has not made clear if it regards their consent as essential.
In addition, evacuation plans for nearly 1 million residents within 30 kilometers of the plant have not been worked out.
Source: The Asahi Shimbun