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Who will pay for decommissioning the Fukushima reactors?

Fukushima Daiichi nuclear power plant

TOKYO -- Energy policy was not high on the agenda in Sunday's upper house election in Japan, in which the ruling Liberal Democratic Party consolidated its power. But Prime Minister Shinzo Abe, the Japanese people and the country's power companies are facing a difficult question over the fate of the future of nuclear power in Japan: who will foot the costly bill for decommissioning the crippled Fukushima Daiichi nuclear power plant?

Every visit to the site, which was devastated by a magnitude-9.0 earthquake and subsequent tsunami five years ago, shows things are moving forward. A full-face mask is no longer needed in 90% of the compound. An underground ice wall is being constructed to reduce the amount of groundwater entering the basements of the reactor buildings. But what really caught my eye this time was the cream puffs. 

Workers engaged in the cleanup effort can now buy the sweets at a convenience store that opened at the site in March. "Every day, we sell at least 50," a clerk said. This represents a significant improvement in working conditions. In addition, last year, a large lounge and a cafeteria opened, providing the 6,000-plus workers with hot meals for the first time.

"Decommissioning is a project that will last 30 or 40 years, and we will have to pass the work on to future generations," said Akira Ono, who stepped down as the plant's manager at the end of June. "We must turn this place from a disaster site to a decommissioning site," he added.

But the road ahead is fraught with obstacles. "We haven't even started climbing the mountain, and we don't even know how high it is," said Naohiro Masuda, head of the decommissioning project and a managing executive officer of Tokyo Electric Power Co. Holdings, better known as Tepco, the plant's operator. The most difficult task is going to be the removal of nuclear debris believed to be sitting inside the containment vessels after it melted through the reactor cores. No one precisely knows the current state of the debris. 

No matter how long it takes, though, we must climb this mountain. Completing the project will require determination, technology and money. The actual cost will become more clear next year, when the company determines how it is going to remove the debris. Tepco hopes to start removal in 2021.

"The overall decommissioning is estimated to cost over 10 trillion yen ($98 billion)," a government official said. But nobody mentions who will pay the bill and how. 

Currently, compensation and decontamination are being covered by the state, on Tepco's behalf, without charging interest. Tepco and other power companies will eventually have to reimburse the government for compensation payouts through a pool of contributions. The government will recoup decontamination costs by selling the Tepco shares it owns.  

Under this program, introduced immediately after the nuclear accident so that Tepco could meet all of its compensation obligations without going bankrupt, 11 power companies that operate nuclear reactors, including Tepco, together made a general contribution of 163 billion yen in the fiscal year to March. Tepco added another 70 billion yen as a special contribution. Although general contributions are meant to create a contingency fund for any future severe accidents at the country's electric companies, they are in reality being used to cover Fukushima-related compensation claims.

Power companies must make general contributions for decades, and the cost is passed on to consumers through higher electricity bills. But with the liberalization of Japan's retail electricity market in April, this mechanism will become increasingly difficult to maintain. Previously, dominant power suppliers, such as Tepco, could recoup the cost by assessing a fee on users within their territories. But that may no longer be possible as government-approved rates will be abolished in a few years, making way for new suppliers to step in with cheaper rates. 

So, who will bear the cost? What about other nuclear-related fees presently added to electricity bills, such as one for the cost of reprocessing used nuclear fuel? Is it possible to pass on the decommissioning costs, which are not yet determined but surely will be massive, to consumers? 

"If Japan is to continue using nuclear power, it needs to have a long-term perspective, including about how nuclear power stations should be operated, rather than making ad hoc plans," said Noriko Endo, a specially appointed professor at Keio University.

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