Japan’s power industry at crossroads as Fukushima decommissioning costs rise – The Mainichi

” The Economy, Trade and Industry Ministry’s plan to add the increased costs of decommissioning the tsunami-hit Fukushima No. 1 Nuclear Power Plant was scrapped before the end of the year due to a public backlash.

It is estimated that the costs of decommissioning the crippled power station would snowball from 2 trillion yen to 8 trillion yen. An internal document that the ministry had compiled by September last year stated that the costs of compensation payments as well as the decommissioning expenses should be added to power transmission fees that new power companies pay for the use of major utilities’ power grids.

If the decommissioning costs that are expected to increase by trillions of yen were regarded as TEPCO’s debts, the utility would fall into a state of capital deficit — in which the company’s debts surpass its assets. It could force TEPCO to delist its stock on stock markets and make it difficult for banks to continue loaning to the firm.

To avoid such a situation, the Economy, Trade and Industry Ministry has decided to change the accounting rules to allow TEPCO to book the decommissioning costs in separate years. To do so, however, it is necessary to guarantee that the costs can be recovered from TEPCO every year. Two plans surfaced to enable this.

One is to accumulate money to be saved through TEPCO’s cost-cutting measures and management reform at the Nuclear Damage Compensation and Decommissioning Facilitation Corp. (NFD), which would control the decommissioning costs. The other is to add part of the decommissioning costs to transmission fees.

In October, a senior ministry official told LDP legislators behind closed doors, “It’s safer to add the costs to the transmission fees than relying on TEPCO’s management reform.”

However, experts as well as the general public intensified their criticism of the plan to add decommissioning expenses to the transmission fees despite the earlier plan to make sure that TEPCO fully secured funds for decommissioning the plant.

In response, the ministry changed its policy. In a Nov. 8 document that the ministry released when briefing LDP members, it stated the two plans as ways to certainly secure enough funds for decommissioning the plant. However, in its Dec. 1 document, the plan to add the costs to transmission fees was dropped.

“We considered the use of transmission fees but we can’t implement it because of mounting criticism of the plan,” said a ministry official in charge of the matter.

On the other hand, major power suppliers besides TEPCO have footed the costs of paying compensation to those affected by the Fukushima nuclear crisis. An expert committee dealing with the matter proposed at the end of the year that the increase in the amount of compensation payments should be raised by adding the amount to transmissions fees.

Saying that power companies that own nuclear plants should have saved money to respond to nuclear accidents, the panel recommended that new power companies should shoulder part of the costs because their customers had previously benefited from nuclear power run by major utilities.

The committee also proposed that major power suppliers be obligated to supply less expensive electricity, such as power generated at nuclear plants, to new power companies. In other words, the panel attempted to take the carrot-and-stick approach to convince new market entrants.

In response to the recommendations, the Economy, Trade and Industry Ministry will implement the proposals after soliciting public comments. As a result of the implementation of the plan, the monthly electric power bill for a standard household in Japan, excluding Okinawa Prefecture where there are no nuclear plants, would rise an average of 18 yen over a 40-year period from 2020.

The ministry patiently and carefully formed consensus among legislators over the plan. The committee’s conclusion was based on its explanatory document that the panel presented to the LDP shortly before.

House of Representatives member Taro Kono and a few other LDP legislators calling for an end to Japan’s reliance on atomic power voiced opposition, but they fell far short of a majority.

Minako Oishi, an adviser on consumer affairs who sits at the experts’ panel, repeatedly voiced opposition to adding compensation costs to transmission fees on the grounds that it would run counter to the purpose of liberalizing the power market. She also released a written statement to that effect. However, she was unable to overwhelm the firm alliance between politicians and bureaucrats.

“I have the impression that the conclusion had been drawn in advance. Such a serious matter as the additional financial burden of dealing with the Fukushima accident should’ve been discussed at the Diet,” Oishi said.

On Dec. 20, 2016, the ministry’s expert committee compiled its recommendations estimating that TEPCO needs to shoulder 16 trillion yen of the cost of dealing with the Fukushima nuclear crisis. The recommendations urged TEPCO to merge each of its divisions, including nuclear power and power transmission, with those of other companies — effectively leading to a split of the utility — and advance into the global market.

On the same day, a message by TEPCO President Naomi Hirose was released through the company’s in-house computer network. “If we steadily continue our work without hesitation, we can open up new opportunities. This is something that only TEPCO can do,” the message said.

However, the message reflects Hirose’s anxiety. Hirose told TEPCO executives the following day at the headquarters, “I’m worried whether employees can maintain their morale. Please try not to make them feel weak.”

TEPCO failed to achieve its goal of getting out of state control as early as fiscal 2017 by improving its business performance — because there are no prospects that its idled Kashiwazaki-Kariwa Nuclear Power Plant in Niigata Prefecture can be reactivated in the foreseeable future.

TEPCO Director Keita Nishiyama sat at the news conference on July 28 with Chairman Fumio Sudo and President Hirose, and read a statement saying that “the government needs to clarify its policy” on how to shoulder the costs of dealing with the nuclear crisis, which is expected to worsen. Nishiyama is a bureaucrat that the ministry loaned to TEPCO as a board member after placing the utility under state control.

His tough statement indirectly asks the government for assistance. A TEPCO executive said, “It’s not a type of statement written by a private company insider.”

At the news conference, the ministry suggested that it would take the opportunity of discussions on how to shoulder the costs of dealing with the Fukushima nuclear crisis to embark on its long-cherished goal of restructuring the electric power and atomic energy industries.

About two months later, the ministry set up two expert panels — one on TEPCO reform and the other on the reform of the electric power system.

“In Japan, the demand for power has stagnated. In particular, regulations on the atomic energy business are stiff. Therefore, the power industry is a declining industry. There’s no time to lose in promoting business tie-ups and overseas expansion. Discussions shouldn’t be limited to TEPCO reform,” said a ministry official.

However, some TEPCO officials have expressed displeasure at the move. “Infrastructure companies like us are different from manufacturers. It’s important to ensure stable power supply. It’s not true that we should just increase our profits,” one of them said.

At the same time, executives of other major power companies reacted coolly to TEPCO.

“We don’t know how much of the costs of dealing with the Fukushima accident we’ll be required to shoulder,” one of them said.

“TEPCO’s arrogance that stood out in the industry is still fresh in our memory,” another commented.

The ministry and the expert panel on TEPCO reform share the view that TEPCO needs to carry out the largest-scale reforms since Yasuzaemon Matsunaga, the “king of the power industry” who established major power companies’ regional monopolies in order to ensure stable power supply.

However, Japanese semiconductor and liquid crystal manufacturers and other companies that were integrated on the initiative of the Economy, Trade and Industry Ministry have not grown as the ministry had aimed.

As such, it remains to be seen whether TEPCO will join hands with other power companies and gain entry into the global market as the ministry envisages. “

by The Mainichi

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Fukushima’s ¥8 trillion cleanup leaves foreign firms in the cold — The Japan Times

” Cleaning up the Fukushima nuclear plant — a task predicted to cost 86 times the amount earmarked for decommissioning Japan’s first commercial reactor — is the mother of all salvage jobs. Still, foreign firms with decades of experience are seeing little of the spoils.

Safely dismantling the Japanese power plant, wrecked by the 2011 earthquake and tsunami, will cost about ¥8 trillion ($70 billion), the Ministry of Economy, Trade and Industry said on Dec. 9, quadrupling the previous estimate. While a contract to help clean up the facility would be a windfall for any firm with specialized technology, the lion’s share of the work has gone to local companies that designed and built most of Japan’s atomic infrastructure.

The bidding process for Fukushima contracts should be more open to foreigners, as Japan has never finished decommissioning a commercial nuclear plant, let alone one that experienced a triple meltdown, according to Lake Barrett, an independent adviser at Japan’s International Research Institute for Nuclear Decommissioning. While the Fukushima cleanup is unlike any nuclear disaster in history, foreign firms that have experience decommissioning regular facilities could provide much-needed support, according to Barrett, and even the plant’s operator, Tokyo Electric Power Co. Holdings Inc.

‘Cultural Resistance’

“Internationally, there is a lot more decontamination and decommissioning knowledge than you have in Japan,” Barrett, a former official at the U.S. Nuclear Regulatory Commission, said in an interview in Tokyo. “I hope the Japanese contracting system improves to get this job done safely. There is this cultural resistance — it is almost like there is an isolated nuclear village still.”

An opaque bidding process plays to the heart of criticisms put forward by independent investigators, who said in a 2012 report that collusion between the government, regulators and the plant’s operator contributed to the scale of the disaster.

Of 44 subsidized projects publicly awarded by the trade and economy ministry since 2014, about 80 percent went to the International Research Institute for Nuclear Decommissioning. The group, known as IRID, was established in the wake of the Fukushima disaster and is comprised entirely of Japanese corporations, according to the ministry’s website.

Japan’s trade and industry ministry awarded funds directly to only two foreign firms during the same period. Many of the contracts had only one or two bidders.

Of about 70 contracts awarded since the March 2011 disaster, nine have gone to foreign companies, according to an official in the ministry’s Agency of Natural Resources and Energy who asked not be named, citing internal policy.

To provide opportunities for foreign companies, the ministry has created an English website for bids and also provides English information sessions to explain the contracts, the official said.

Toshiba, Hitachi

IRID’s contracts are given to its members, including Toshiba Corp., Hitachi Ltd. and Mitsubishi Heavy Industries Ltd., which have partnerships and joint ventures with foreign firms, spokesman Yoshio Haruyama said by phone. While it doesn’t directly contract work to companies overseas, IRID taps foreign experts as advisers and participates in international collaborative projects, he said.

Mitsubishi Heavy has about five or six contracts through IRID, but can’t share how many partnerships it has with foreign firms, spokesman Shimon Ikeya said by phone. Hitachi has sub-contracts with foreign suppliers related to the Fukushima cleanup, but can’t provide details about these agreements because they aren’t public, a spokesperson said by email.

As of March, IRID had about ¥30 billion worth of ongoing contracts primarily related to research and development of fuel removal and waste treatment. IRID, which aims to “gather knowledge and ideas from around the world” for the purpose of nuclear decommissioning, doesn’t disclose how much of their money ultimately goes to foreign businesses, according to its spokesman. Barrett, its adviser, said he thinks it’s “very low,” but should ideally be 5 percent to 10 percent.

‘Nuclear Village’

Japan’s biggest nuclear disaster isn’t void of foreign technology. Toshiba, which owns Pennsylvania-based Westinghouse Electric Co., and Hitachi, which has a joint venture with General Electric Co., are tapping American expertise. A giant crane and pulley system supplied by Toshiba to remove spent fuel from the wrecked reactors employs technology developed by Westinghouse.

“We bring in knowledge from foreign companies, organizations and specialists in order to safely decommission the reactors,” Tatsuhiro Yamagishi, spokesman for Tepco, said by email. While the company can’t say the exact number of foreign firms involved in the Fukushima cleanup, companies including Paris-based Areva SA, California-based Kurion Inc. and Massachusetts-based Endeavor Robotics are engaged in work at the site, according to Yamagishi.

For foreign firms, however, independently securing contracts is still a tall order.

“When it comes to Japan’s nuclear industry, the bidding system is completely unclear,” Hiroaki Koide, a former assistant professor at Kyoto University Research Reactor Institute, said in an email. “The system is designed to strengthen the profits of Japan’s nuclear village,” he added, referring to the alliance of pro-nuclear politicians, bureaucrats and power companies that promote reactors.

Tepco’s annual cost to decommission its Fukushima plant may blow out to several hundred billion yen a year, up from the current estimate of ¥80 billion, the trade and industry ministry said in October. As of June, almost ¥1 trillion has been allocated for decommissioning and treating water at Fukushima, according to Tepco’s Yamagishi.

‘Ripe for Corruption’

With that much money at stake, Japan has become ground zero for a plethora of companies looking to benefit from the cleanup work. The structure of Japan’s nuclear industry and the closed procurement preferred by the utilities that operate atomic plants means that the most lucrative opportunities for foreign companies are in the area of subcontracting, according to a report by the EU-Japan Centre for Industrial Cooperation released in March.

“Foreign firms have long argued that the Japanese bidding process is one that is ripe for corruption due to a lack of openness and transparency,” Daniel Aldrich, professor and director of the security and resilience studies program at Northeastern University in Boston, said in an email. For nuclear decommissioning “there is even less clarity and transparency due to security and proliferation concerns,” he said.

Rigging Bids

The Japan Fair Trade Commission raided the offices of five companies last year in relation to rigged bids for maintenance contracts from Tepco, according to Jiji Press. Eleven road-paving companies were fined in September on projects to repair roads following the March 2011 earthquake and tsunami, Jiji reported.

Andrew DeWit, a political economy professor at Rikkyo University in Tokyo, agrees that the contract-awarding process isn’t transparent. A lot of foreign companies seek Japanese partners to better their chances, he said.

Purolite Corp., a closely held water purifying company, spent millions of dollars developing and testing a system that could be used to treat radioactive water at Fukushima. Pennsylvania-based Purolite partnered with Hitachi to help win a contract to use its technology at the wrecked facility.

Those plans didn’t pan out. Purolite is suing Hitachi in New York and Tokyo, alleging that Hitachi is using its technology at Fukushima in breach of agreements made in 2011, shutting it out of more than $1 billion in contracts, according to court documents filed in September.

Hitachi doesn’t comment on ongoing legal matters, a spokesperson said by email.

“With a smaller pool of competitors, firms can expand their profit margins,” said Northeastern University’s Aldrich. “There are French and Russian firms that have the technical expertise to participate in nuclear decommissioning processes, but it is unclear if they will be able to compete on a level playing field with Japanese firms, which have far more experience with Japanese regulations and expectations.” ”

by Stephen Stapczynski, Bloomberg

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Public funds earmarked to decontaminate Fukushima’s ‘difficult-to-return’ zone — The Mainichi

” The government is set to inject some 30 billion yen in public funds into work to decontaminate so-called “difficult-to-return” areas whose annual radiation levels topped 50 millisieverts in 2012 due to the Fukushima No. 1 Nuclear Power Plant disaster, it has been learned.

While the government had maintained that it would demand plant operator Tokyo Electric Power Co. (TEPCO) cover the decontamination expenses based on the polluter-pays principle, the new plan effectively relieves TEPCO from the hefty financial burden by having taxpayers shoulder the costs.

The new plan is part of the government’s basic guidelines for “reconstruction bases” to be set up in each municipality within the difficult-to-return zone in Fukushima Prefecture from fiscal 2017, with the aim of prioritizing decontamination work and infrastructure restoration there. The government is seeking to lift evacuation orders for the difficult-to-return zone in five years.

However, the details of the reconstruction bases, such as their size and locations, have yet to be determined due to ongoing discussions between local municipalities and the Reconstruction Agency and other relevant bodies.

The government is set to obtain Cabinet approval for the basic guidelines on Dec. 20 before submitting a bill to revise the Act on Special Measures for the Reconstruction and Revitalization of Fukushima to the regular Diet session next year. The 30 billion yen in funds for the decontamination work will be set aside in the fiscal 2017 budget.

In the basic guidelines, the government states that decontamination work at the reconstruction bases is part of state projects to accelerate Fukushima’s recovery and that the costs for the work will be covered by public funds without demanding TEPCO to make compensation. The statement is also apparently aimed at demonstrating the government’s active commitment to Fukushima’s restoration.

Under the previous guidelines for Fukushima’s recovery approved by the Cabinet in December 2013, the government had stated that it would demand TEPCO cover the decontamination expenses of both completed and planned work. However, it hadn’t been decided who would shoulder the decontamination costs for the difficult-to-return zone as there was no such plan at that point.

Masafumi Yokemoto, professor at Osaka City University who is versed in environmental policy, criticized the government’s move, saying, “If the government is to shoulder the cost that ought to be covered by TEPCO, the government must first accept its own responsibility for the nuclear disaster, change its policy and investigate the disaster before doing so. Otherwise, (spending taxpayers’ money on decontamination work) can’t be justified.” “

by The Mainichi

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Japan nearly doubles Fukushima disaster-related cost to $188 billion — Reuters

” Japan’s government on Friday nearly doubled its projections for costs related to the Fukushima nuclear disaster to 21.5 trillion yen ($188 billion), increasing pressure on Tokyo Electric Power (Tepco) (9501.T) to step up reform and improve its performance.

The new estimates could mean a heavier burden for Tepco and other utilities that are helping to pay the costs, and could result in higher power bills for consumers in the long run.

In 2013, the Ministry of Economy, Trade and Industry (METI) had calculated the costs of the Fukushima meltdowns at 11 trillion yen. METI boosted its estimate as industry experts now see decommissioning of the wrecked Fukushima reactors at 8 trillion yen, quadruple an earlier estimate of 2 trillion yen.

The new projection, part of a recommendation from a government panel considering the future of Tepco and Fukushima Daiichi, also calls for 7.9 trillion yen in reparations, up from 5.4 trillion yen, and 5.6 trillion yen for the treatment and storage of contaminated soil, up from 3.6 trillion yen.

“For now, we don’t expect the costs to increase further, but new developments and unforeseen factors mean there is a chance they could go higher,” METI Minister Hiroshige Seko told a press conference.

“Decommissioning technological innovation and a speedier clean up could help reduce costs and it is important that we put effort into that,” he said.

Tepco’s portion of the burden has more than doubled to 15.9 trillion yen from 7.2 trillion yen, while other major utilities will need to pay 3.7 trillion. New electric companies will have to shoulder 240 billion yen.

A METI official said the new projections of the decommissioning costs are an estimate based on certain assumptions and the costs of the Three Mile Island nuclear accident, and does not represent a loss Tepco needs to book. ”

by Yuka Obayashi and Kentaro Hamada

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Japan tsunami highlights Fukushima nuclear plant vulnerability — Voice of America

” The 7.4 magnitude earthquake and small tsunami that struck Japan’s northeast coast on Tuesday morning tested the sea wall constructed around the Fukushima nuclear plant, that was the site of one of the worst nuclear catastrophes in history.

The earthquake hit at early morning and was centered off the coast of the Fukushima Prefecture at a depth of about 10 kilometers, according to the Japan Meteorological Agency.

The Pacific Tsunami Warning Center said the first wave of the tsunami was measured at 90 centimeters, then the waves died down. About an hour and a half after the earthquake there was also 1.4 meter wave that was large enough to cause some flooding.

Japanese television showed tsunami waves flowing up rivers in some areas, and some fishing boats were overturned in the port of Higashi-Matsushima.

Reports of injuries and damage from Tuesday’s earthquake and tsunami were minimal. Residents in the region evacuated to higher ground after tsunami warning sirens sounded in the early morning and many ships moved out to sea to ride out the incoming ocean surge.

Magnitude

While the Japan Meteorological Agency calculated the earthquake’s magnitude at 7.4, the U.S. Geological Survey (USGS) measured it to be a 6.9 quake.

Tuesday’s earthquake was much less powerful than the 9.0 earthquake that struck the same region in March of 2011, generating enormous tsunami waves, some as high a 40 meters, that killed close to 20,000 people and caused the meltdown of the Fukushima Nuclear Power Plant, the worst nuclear crisis since Chernobyl a quarter of a century earlier.

Geophysicist Rafael Abreu with the USGS Earthquake Information Center says a one magnitude point rise on the seismic scale equals a 32 time increase in destructive power released during an earthquake.

“The magnitude of a 9.0 quake is an earthquake that released 32×32, over 1,000 times more energy then the quake that we had today,” said Abreu.

Fukushima

The Fukushima nuclear reactors that were damaged during the 2011 meltdown have been since shut down, but the Tokyo Electric Power Company (TEPCO) still maintains cooling systems to prevent the spent nuclear material from overheating and spewing radioactive waste into the air and ocean.

Naohiro Masuda, head of TEPCO’s Decommissioning Unit, said on Tuesday a one-meter tsunami was observed from two Fukushima nuclear power plants but precautions were taken to prevent a possible breech.

“With regards to Fukushima plant No. 1, it appears to be there is no problem inthe plant, but we proactively stopped operation of the contaminated water discharge system with a judgement that it could be problematic if it (radioactive water) leaks out,” he said.

In 2015, TEPCO competed a 780-meter coastal sea wall around the heavily damaged reactor buildings of the Fukushima No. 1 plant to reduce the amount of contaminated water flowing into the ocean. During the worst of the crisis it was leaking 400 tons of radioactive water a day.

An ice wall has also been constructed to reduce the amount of water flowing into the nuclear plant from the nearby mountains.

Kendra Olrich, a Senior Global Energy Campaigner with the environmentalist organization Greenpeace in Japan, said the sea wall fared relatively well this time but Tuesday’s earthquake illustrates that Japan is too geologically unstable to safely operate nuclear power plants.

“All of these earthquakes continue to highlight the absurdity of having nuclear power in a country that is sitting on the Pacific ring of fire,” she said.

Inside the damaged Fukushima plants, efforts are still underway to remove the molten nuclear core and move the highly radioactive materials to a safer storage facility.

Olrich said radioactive contamination that seeped into the surrounding forests during the tsunami five years ago continue to pose a danger to public health and safety. She is also critical of government plans to lift evacuation orders in affected areas next year that would end TEPCO’s obligation to provide compensation, at the cost of potentially exposing residents to increased risks. ”

by Brian Padden; contributions from Youmi Kim

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Editorial: Cost estimate needed first to decommission Fukushima plant — The Asahi Shimbun

” An industry ministry panel of experts is tackling two key questions concerning the decommissioning of the crippled Fukushima No. 1 nuclear power plant.

One is how much money will be needed to decommission the plant’s reactors, three of which melted down. The other is who should foot the bill and how.

However, there are some serious flaws in the way the expert panel is working on these knotty questions, which could lead to a huge financial burden on the public.

First of all, the panel’s meetings are not open to the public. The main points of the discussions are published later, but many details, including who made specific remarks, are omitted.

The fate of Tokyo Electric Power Co., which operates the Fukushima plant and is responsible for its decommissioning, will be largely determined by whether it can restart its Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture.

Panel members include many business leaders who have been promoting nuclear power generation.

The outcome of the recent Niigata gubernatorial election underscored the strong opposition of local residents against TEPCO’s plan to bring the plant back online.

The panel’s lineup raises concerns that its discussions may be based on the assumption that the Kashiwazaki-Kariwa nuclear plant will eventually be restarted, despite the situation in the prefecture.

Another troubling fact is that the government has yet to announce any estimate of the total decommissioning cost.

In the panel’s first meeting, some members urged the government to swiftly present an estimate of the cost. In the second meeting, however, the Ministry of Economy, Trade and Industry only said that annual spending could grow to several hundreds of billions of yen from about 80 billion yen ($703 million) spent now.

The ministry says a specific estimate of the total cost will be announced as early as the end of the year, along with a plan for management reforms at TEPCO and a package of related measures the government will take.

But this timetable doesn’t make sense. Pinning down the overall decommissioning cost should be the starting point for the panel’s discussions.

With the conditions of the melted nuclear fuel remaining unclear, it is certainly difficult to accurately estimate the cost.

Still, an estimate should first be shown to ensure substantive debate on whether the method used for the work is appropriate and whether there are ways to curb the cost.

As for financing, the panel has supported the proposal that TEPCO should secure the necessary funds on its own through management reform over other options, such as the utility’s liquidation involving debt forgiveness by its creditors, tax financing by the government and a continuation of the current state control of TEPCO.

In an apparent attempt to stress the importance of TEPCO’s own efforts to save itself, the panel has also recommended that the Kashiwazaki-Kariwa nuclear plant should be spun off from TEPCO and integrated with the nuclear power business of another utility.

There is no disputing that TEPCO should push through thorough management reforms to prevent the public from shouldering part of the cost through tax financing or hikes in electricity rates.

The question, however, is whether the embattled utility’s own efforts will be enough to cover the entire decommissioning cost, expected to reach several trillions of yen.

If a plan based on the company’s own efforts fails and disrupts the decommissioning process, the reconstruction of disaster-hit areas in Fukushima Prefecture could be seriously delayed.

It is vital for the panel to win broad public support for its proposals on the national challenge of decommissioning the Fukushima No. 1 nuclear power plant.

This requires careful, exhaustive and reasonable debate, open to the public, on the cost and the financing method. ”

by The Asahi Shimbun, Oct. 27

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