TOKYO -- The election of an anti-nuclear candidate as governor of Japan's Niigata Prefecture could hit the finances of not only Tokyo Electric Power Co. Holdings but the public as well, as the utility is relying on a reactor restart in Niigata to cover Fukushima cleanup costs.
The central government reached an arrangement in 2014 to extend up to 9 trillion yen ($86.6 billion currently) in interest-free loans to pay for dealing with the fallout of the 2011 Fukushima Daiichi nuclear plant disaster. Of this, 5.4 trillion yen is to go toward compensating those affected, with Tepco and other power companies, including Kansai Electric Power and Chubu Electric Power, to repay the loans. Another 2.5 trillion yen is earmarked for decontamination work, with the costs to be recouped through the sale of Tepco shares held by the government.
But more than 6 trillion yen in compensation has been paid out so far, and cost overruns on decontamination are seen as all but certain. Decommissioning work at Tepco's Fukushima plant, such as extracting fuel, falls outside the 9 trillion yen framework.
The 2 trillion yen Tepco had aimed to secure on its own to pay for scrapping the plant will be nowhere near enough. The utility and Japan's industry ministry had counted on bringing the Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture back online, which would improve Tepco's earnings by 240 billion yen a year. But Gov.-elect Ryuichi Yoneyama has indicated that he is not amenable to a quick restart.
An expert panel set up by the ministry started discussing how to handle the additional costs this month. It laid out a scenario in which improved profit margins at Tepco via restructuring, along with profits from the Kashiwazaki-Kariwa facility, would be used to minimize the amount shouldered by taxpayers.
The longer it takes to restart the plant in Niigata, the larger the hit will be to Tepco's available funding for Fukushima costs. Though the utility will squeeze out some money via internal reforms, Tepco may use rate hikes to pass on to the public what it cannot cover itself. Tepco and other utilities already have raised rates to recoup part of the compensation costs. A top industry ministry official indicated that rate increases will also be on the table to pay for decommissioning.
Power companies besides Tepco could be affected as well. Since many nuclear plants in eastern Japan use boiling-water reactors like those at the Kashiwazaki-Kariwa plant, further delays could hold up other reactor restarts in the region.