Japanese utilities cool to Tepco's tie-up proposals
Fukushima plant operator needs partners to lift profit
TOKYO -- Tokyo Electric Power Co. Holdings will likely face difficulty finding business partners as rival utilities remain cautious about joining hands with the troubled Fukushima plant operator, casting doubts over a recovery scenario envisioned by the government.
A proposal compiled by experts sees Tepco revamping or consolidating operations with other utilities in nuclear and coal-fired power generation as well as electricity distribution. The steps are aimed at enhancing Tepco's earnings power in order to let the beleaguered utility pay as much of the costs as possible involving the 2011 nuclear disaster, which have ballooned to 21.5 trillion yen ($182 billion).
The proposal, commissioned by the Ministry of Economy, Trade and Industry, calls for "forming a joint entity" with a partner "at an early date for reorganization and integration." Talks with other companies will start next year, and the joint entity will be established in the early 2020s, according to Tepco's timeline.
Other utilities will see that such a tie-up will "benefit" them as well, a senior ministry official said Tuesday, so "a win-win alliance is entirely possible."
Electricity rate hikes and cheap oil prices have improved Tepco's performance of late, but the utility faces roughly 16 trillion yen in reactor decommissioning and compensation costs at Fukushima. Tepco should ask for cooperation from its peers, particularly those in neighboring service areas, the ministry said.
But other utilities fear such cooperation might hurt their business. Asked about the ministry panel's proposal at a news conference Tuesday, President Satoru Katsuno of Nagoya-based Chubu Electric Power said he "has not considered" it yet. "I don't know any specifics," he said brusquely.
Hiroya Harada, president of Tohoku Electric Power, was also cool to the idea. Partnering with Tepco in nuclear power generation is "not under consideration at all" for the Sendai-based utility, Harada told reporters Friday. "Nuclear power generation is an industry closely tied to localities," he said. "Partnership or reorganization with another company would be extremely difficult."
Kansai Electric Power, which serves greater Osaka, holds a similar view. Consolidating the electricity distribution business with Tepco "would not be easy since different companies have different systems," President Shigeki Iwane said in November.
Tepco will incorporate the panel's suggestions when updating its rehabilitation plan next spring before soliciting partners. The Tokyo-based utility hopes to lift profit, targeted at 400 billion yen to 500 billion yen, further with the overhaul. But if the company cannot find a partner, this plan would go back to square one. Similarly, the government's plans to unload its Tepco shareholdings and use 4 trillion yen of the proceeds to pay for decontamination work depend on hopes that the utility's stock will rise.
Some members of the ministry's panel are concerned as well. "Other utilities are afraid that they would be thrown into the turmoil under the reorganization," one member said. Another urged the government to serve as a coordinator among Tepco and other utilities.