TOKYO -- Tokyo Electric Power Co. Holdings aims to generate 500 billion yen ($4.39 billion) annually for its decadeslong nuclear cleanup by turning transmission and nuclear power operations into profit-making machines, but numerous hurdles remain.
"We aim to build the value of the company through realignments and mergers," Tepco President Naomi Hirose told a news conference Thursday. The utility and the government-backed fund that is Tepco's majority shareholder presented a fresh turnaround plan through the year ending March 2027 for approval by Hiroshige Seko, minister of economy, trade and industry.
The utility was forced to update its revival plan as costs related to the March 2011 nuclear meltdown disaster are now seen totaling around 22 trillion yen -- double the previous estimate. This means Tepco now needs to come up with 500 billion a year to handle the aftermath.
Tepco looks to set up "a basic framework for cooperation" on nuclear power around fiscal 2020. The first step is finding a partner to continue work on the halted Higashidori plant in Aomori Prefecture. Tohoku Electric Power, which runs a nuclear power plant on an adjoining site, is thought to be a leading candidate, according to an official at the industry ministry.
The utility aims also to set up a consortium for transmission operations early next decade. Consolidating control of such operations across Japan aims to bring down overall costs. Overseas expansion is in the pipeline as well.
Back in business
Those visions dovetail with a plan to restart key nuclear power plants in short order. The utility has mapped out several scenarios for bringing the seven reactors at Niigata Prefecture's Kashiwazaki-Kariwa plant back online, the earliest beginning in fiscal 2019. By restarting the reactors, Tepco aims to earn pretax profit between 160 billion yen and 215 billion yen on average over the next 10 years. Fossil-fuel power plants would be taken out of service as nuclear plants came online to replace them, reducing fuel costs.
But even Hirose recognized that the scenarios in the plan and an "actual restart are different matters entirely." Niigata Gov. Ryuichi Yoneyama remains highly skeptical about restarting the plant, and Tepco has yet to win local support.
The central government will weigh unloading its stake in Tepco at the end of fiscal 2019 based on the utility's progress toward its turnaround goals. But hitting earnings targets will be a formidable challenge, particularly without a nuclear restart. Nor will realignment plans necessarily proceed as Tepco hopes: Many utilities are leery of teaming up with their struggling peer.