November 3, 2016 6:00 am JST

Japan's new utilities object to footing part of Fukushima bill

TOKYO -- Japanese independent power providers are up in arms over a government proposal to have them shoulder some costs related to the fallout of the 2011 Fukushima Daiichi nuclear disaster, including compensating victims and decommissioning old reactors.

"Why should we have to pick up compensation costs for Tepco's accident?" fumed a top official at a company selling electricity in the Tokyo area, referring to Fukushima Daiichi operator Tokyo Electric Power Co. Holdings.

Given the narrow profit margins involved in power retailing, new suppliers will likely pass these costs on to customers. More than half a year on from the full liberalization of Japan's electricity retail market, just 3% or so of households have switched to independent power providers from big regional utilities that had monopolized the market. Some observers worry that forcing newcomers to take on some of the nuclear costs could further slow the glacial pace of the market expansion by taking away their price advantage.

The charges will likely be collected by adding them onto fees for using the regional utilities' transmission infrastructure. "We won't have any choice but to raise rates," sighed an executive at a major independent power supplier.

Many people chose to make the jump from regional utilities as a protest against nuclear power. "It'd be tough to get customers to accept" covering nuclear-related costs, Tokyo Gas President Michiaki Hirose told reporters in October. Tokyo Gas is the largest of the new players with more than 500,000 service contracts.

Sure enough, Tokyo-area suppliers have heard complaints from such customers arguing that having independent providers cover decommissioning expenses would render their decision to switch pointless. "We've gotten questions from customers about whether we're going to pay" these costs, said the head of an independent power company that focuses on renewable energy.

The government aims to scrap aging nuclear reactors while bringing newer facilities back online. One of the major new power providers acknowledges that it would be impossible to maintain nuclear power generation without support from the whole country.

But the new suppliers are demanding to know the details of Tepco's compensation costs before they pay up. Many also argue that regional utilities should be forced to provide some cheap nuclear power to the electricity wholesale market so they will also feel pain if newcomers are forced to contribute funds.

(Nikkei)

Tokyo Electric Power Co. Holdings, Inc.

Japan

Market(Ticker): TKS(9501)
Sector:
Industry:
Utilities
Electric Utilities
Market cap(USD): 6,675.86M
Shares: 1,607.01M

Tokyo Gas Co., Ltd.

Japan

Market(Ticker): TKS(9531)
Sector:
Industry:
Utilities
Gas Distributors
Market cap(USD): 11,460.52M
Shares: 2,290.36M

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