Six years after Japan’s Fukushima nuclear accident three global nuclear corporations are fighting for their very survival.
The bankruptcy filing by Westinghouse Electric Co. and its parent company Toshiba Corp. preparing to post losses of ¥1 trillion (US$9 billion), is a defining moment in the global decline of the nuclear power industry.
However, whereas the final financial meltdown of Westinghouse and Toshiba will likely be measured in a few tens of billions of dollars, those losses are but a fraction of what Tokyo Electric Power Co. (Tepco) is looking at as a result of the Fukushima nuclear disaster.
If the latest estimates for the cost of cleaning up the Fukushima plant prove accurate, Tepco faces the equivalent of a Toshiba meltdown every year until 2087.
In November 2016, the Japanese Government announced a revised estimate for the Fukushima nuclear accident (decommissioning, decontamination, waste management and compensation) of ¥21.5 trillion (US$193 billion) – a doubling of their estimate in 2013.
But the credibility of the government’s numbers have been questioned all along, given that the actual ‘decommissioning’ of the Fukushima plant and its three melted reactors is entering into an engineering unkown.
This questioning was borne out by the November doubling of cost estimates after only several years into the accident, when there is every prospect Tepco will be cleaning up Fukushima well into next century.
And sure enough, a new assessment published in early March from the Japan Institute for Economic Research, estimates that total costs for decommissioning, decontamination and compensation as a result of the Fukushima atomic disaster could range between ¥50-70 trillion (US$449-628 billion).
If confirmed over the coming years, it will be the most expensive industrial accident in history with even greater implications for the people and energy future of Japan.
Rather than admit that the Fukushima accident is effectively the end of Tepco as a nuclear generating company, the outline of a restructuring plan was announced last week.
Tepco Holdings, the entity established to manage the destroyed nuclear site, and the Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF) are seeking ways to sustain the utility in the years ahead, confronted as they are with escalating Fukushima costs and electricity market reform.
The NDF, originally established by the Government in 2011 to oversee compensation payments and to secure electricity supply, had its scope broadened in 2014 to oversee decommissioning of the Fukushima Daiichi plant on the Pacific Ocean coast north of Tokyo.
The latest restructuring plan is intended to find a way forward for Tepco by securing a future for its nuclear, transmission and distribution businesses. If possible in combination with other energy companies in Japan.
But the plan, already received less than warmly by other utilities rightly concerned at being burdened with Tepco’s liabilities, is premised on Fukushima cost estimates of ¥21.5 trillion — not ¥50-70 trillion.
To date Tepco’s Fukushima costs have been covered by interest-free government loans, with ¥6 trillion (US$57 billion) already paid out. Since 2012 Tepco’s electricity ratepayers have paid ¥2.4 trillion to cover nuclear-related costs, including the Fukushima accident site.
That is nothing compared to the costs looming over future decades and beyond and it comes at a time when Tepco and other electric utilities are under commercial pressure as never before.
The commercial pressure comes from electricity market reform that since April 2016 allowed consumers to switch from the monopoly utilities to independent power providers.
In the ten months to February 2017, the main electric utilities lost 2.5 million customers, with Tepco alone losing more than 1.44 million. Hence, profits have fallen off a cliff.
Prior to the deregulation of the retail electricity market, Tepco had 22 million customers. As the Tepco president observed late last year “The number (of customers leaving Tepco) is changing every day as the liberalization continues … We will of course need to think of ways to counter that competition.”
Countering that competition shouldn’t mean rigging the market, yet Tepco and the other utilities intend to try and retain their decades long dominance of electricity by retaining control over access to the grid. This is a concerted push back against the growth of renewable energy.
Current plans to open the grid to competition in 2020, so called legal unbundling, are essential to wrest control from the big utilities.
The message of unbundling and independence, however, doesn’t seem to have reached the Ministry of Economy, Trade and Industry (METI) that oversees the electricity industry.
Current plans would allow Tepco to establish separate legal entities: Tepco Fuel & Power (thermal power generation), Tepco Energy Partner (power distribution) and Tepco Power Grid (power transmission).
Tepco Holdings will retain their stock and control their management, meaning the same monopoly will retain control of the grid. Where Tepco leads, the other nine electric utilities are aiming to follow.
Leaving the grid effectively still under the control of the traditional utilities will throw up a major obstacle to large scale expansion of renewable energy sources from new companies.
Such businesses will be ‘curtailed’ or stopped from supplying electricity to the grid when the large utilities decide it’s necessary, justified for example to maintain the stability of the grid.
The fact that ‘curtailment’ will be permitted in many regions without financial compensation piles further pain onto new entrants to the electricity market, and by extension consumers.
Further, METI plans to spread the escalating costs of Fukushima so that other utilities and new power companies pay a proportion of compensation costs. METI’s justification for charging customers of new energy companies is that they benefited from nuclear power before the market opened up.
The need to find someone else to pay for Tepco’s mess is underscored by the breakdown of the Fukushima disaster cost estimate in November.
When put at ¥22 trillion estimate, ¥16 trillion is supposed to be covered by Tepco. The Ministry of Finance is to offer ¥2 trillion for decontamination, and the remaining ¥4 trillion is to be provided by other power companies and new electricity providers.
The question is how does Tepco cover its share of the costs when it’s losing customers and its only remaining nuclear plant in Japan, Kashiwazaki Kariwa (the worlds largest), has no prospect of restarting operation due to local opposition?
What happens when Fukushima costs rise to the levels projected of ¥50-70 trillion?
The policy measures being put in place by Tepco, other utilities and the government suggests that they know what is coming and their solution for paying for the world’s most costly industrial accident will be sticking both hands into the public purse.
Shaun Burnie is a senior nuclear specialist with Greenpeace Germany, Tokyo. He has worked on nuclear issues worldwide for more than three decades, including since 1991 on Japan’s nuclear policy. email@example.com
I used to argue with my uncle, an engineer for GE with friends at Westinghouse. I told him nuclear power was too dangerous to pursue. But I was just a kid, what did I know? This was back in the days when the industry was promising power "too cheap to meter." Guess we know now how that turned out.
I’d want know about the financial fallout of Fukushima accident on consumers (homes and businesses) and government revenue spending parameters, and the reasons why METI and its arm, the Agency of Natural Resources and Energy, are digging in heels to continue nuclear power generation. Is it for Japan to stock up on nuclear arms technology (naive thinking), or to feed the mouths of thousands of bureaucrats and their subordinates on a sustainable basis?
And Tepco and Toshiba, publicly listed companies that are subject to Tokyo Stock Exchange rules, be delisted from TSE long ago because they have been in negative equity, but they are still surviving like zombies, hardly with no punishment of former Tepco CEOs. This is already causing a morale hazard (Toshiba executives for one) in the Japanese corporate sector. Japan has a lot to learn from South Korea.
good work from shaun burnie, as always. it’s time to dismantle these nuke beasts and move to Solartopia, where fiscal and ecological sanity prevail simultaneously.
Actually, you were doing the same thing we did in 1969 when we TOLD the general public the TRUTH in that the vietnam WAR was a fraud that was being PLAYED out by OUR OWN GOVERNMENT! Times haven’t changed, just the International PLAYERS. However, we the people are STILL FORCED to pay the BILLS.
Oops! Isn’t THIS really TAXATION without representation? The people ABOVE really ACT like they NEED NO INPUT from the people below who are PAYING THE BILL at the DEMANDS of OUR (??) Governments.
Actually, if you ask a person who REALLY knows about what is going on you would ASK Arnie Gundersen at Fairewinds. Arnie is CORRECT in EVERYTHING he has stated in WRITING about what you and the WORLD is going through on the NUCLEAR Sleigh Ride…OFF THE CLIFF!
And, Individual house SOLAR would NOT need the GRID. Don’t sell it back to anyone, just use wht you NEED. Using THATapproach would allow individual homes to STOP paying $$$ into such TEPCO demands, etc, etc. Go INDIVIDUAL SOLAR with both Electricity & Water (from the AIR). Technology mkes IT ALL available TODAY.. Actually, CARRIER made it available to the WORLD in 1950. (http://www.answers.com/Q/Who_invented_the_dehumidifier?#slide=2 ) Technology just vastly improved it over the past 67 YEARS!! Yet, most do STILL NOT KNOW THIS! Amazing!
Spare change, PLEASE?
genetic damage not included.
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