Reactors' safety approval is good sign for Tepco turnaround
Restarting key nuclear plant could nearly double profit
TOKYO -- Tokyo Electric Power Co. Holdings is one step closer to a financial recovery after Japan's nuclear regulator said Wednesday that two nuclear power reactors expected to be major earners are safe to restart.
The Kashiwazaki-Kariwa power station in Niigata Prefecture is Tepco's first nuclear facility to clear tougher safety standards adopted by Japan in 2013 to prevent a repeat of meltdowns at the utility's Fukushima Daiichi plant in March 2011. The Nuclear Regulation Authority will grant formal safety approval of the No. 6 and No. 7 reactors there following 30 days of public comment. Bringing the massive facility back online is at the heart of Tepco's plan to improve earnings and come up with the 16 trillion yen ($141 billion) it owes toward recovery from the Fukushima disaster.
Tepco in May presented several recovery scenarios predicated on restarting Kashiwazaki-Kariwa in or after fiscal 2019. Resuming operations at the Nos. 6 and 7 reactors alone -- the largest of the facility's seven units by electrical output -- is seen improving annual earnings by 100 billion yen to 220 billion yen. This would allow the company to cut back at conventional power plants, where fuel costs are high. The impact would be substantial: Tepco logged just 227.6 billion yen in consolidated pretax profit in the year ended in March.
The utility has spent 680 billion yen improving earthquake resistance, installing a seawall and otherwise making the Kashiwazaki-Kariwa plant safer in light of a 2007 earthquake off the Sea of Japan coast and Japan's new standards for nuclear plants. These improvements are expected to more than pay for themselves once the facility is back in action.
But passing regulatory scrutiny is only the first step. Tepco must also win approval from local communities in and around Niigata Prefecture before the reactors can resume operations. The utility pledged Wednesday to "endlessly" strive "to improve nuclear power safety," and also "to further safety improvement and reliability at the Kashiwazaki-Kariwa" plant. But Niigata Gov. Ryuichi Yoneyama, elected last year on a stringently anti-nuclear platform, remains skeptical, saying there will be "no discussion of a restart until the prefecture confirms it would be safe."
The NRA's safety inspection "is limited to technological aspects of the facility," and does not take into account citizens' "health and livelihoods or evacuation plans," the governor said Wednesday afternoon. Multiple prefecture-level authorities will continue conducting their own investigations, he said. No restart will be discussed until the causes and impact of the Fukushima disaster are fully ascertained and a safe evacuation method devised in case of another accident, Yoneyama explained -- a process he sees taking around three years.
Local leaders are more open to the prospect of a restart, anticipating economic benefits for the surrounding region. Masahiro Sakurai, mayor of the nearby city of Kashiwazaki, is generally supportive of a restart, but on Wednesday asked Tepco to draw up plans for decommissioning the remaining five reactors at the plant within two years. Hiro Shinada, mayor of the village of Kariwa, has said he would support a restart once the reactors receive formal NRA approval.
Tepco is considering placing nuclear operations under a separate in-house company to avoid repeating past incidents in which the utility failed to adequately explain anti-earthquake measures at the plant or otherwise damaged public trust. The hope is that bringing together related businesses will make for better communication with the outside world.