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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Britain and Japan sign nuclear energy cooperation agreement — The Telegraph

” Britain and Japan have signed an agreement that significantly expands cooperation in the nuclear energy sector and paves the way for Japanese companies to construct nuclear plants in the UK.

It also covers cooperation in the areas of decommissioning and decontamination and it is anticipated that the deal will give British companies with advanced technologies greater access to projects at the Fukushima Daiichi nuclear plant, where three of the six reactors suffered melt-downs after the March 2011 earthquake and tsunami disaster.

The memorandum of understanding was signed in Tokyo on Thursday by Hiroshige Seko, the Japanese trade and industry minister, and Greg Clark, the business and energy secretary.

The agreement is the first of its kind for Japan, while Mr Clark described it as “vital” to the UK’s industrial strategy and the development of clean energy sources.

One of the key components of the agreement is the proposals by Hitachi and Toshiba to build new reactors in Britain.

Horizon Nuclear Power, bought by Hitachi from a German company in 2012, has delivered the outline of a project at Wylfa Newydd in Wales, and has plans to build as many as six reactors in the UK. Toshiba joint venture NuGeneration is planning a nuclear plant in Cumbria and is considering additional projects.

Speaking in Tokyo last week, Philip Hammond, the Chancellor, said: “The technology is proven and well-known. Hitachi and Toshiba have the technology. The challenge really is financing, not a technical or commercial challenge.”

The two governments are to review investment and lending for Horizon through the Japan Bank for International Cooperation and the Development Bank of Japan. Financing of the project from the Japanese side is expected to reach Y1 trillion (£7 billion).

Japan is particularly keen for the projects to go ahead after its previous attempt to export nuclear energy technology, to Vietnam, fell through.

Japan and Britain will also collaborate on nuclear research and development, as well as security.

The deal on nuclear energy with Japan has progressed smoothly, in contrast to the problems the £18 billion Hinkley Point C project encountered earlier in the year.

That scheme is a joint venture between EDF, which is 85 per cent owned by the French state, and China General Nuclear Power Corp. It was put on hold in July, over concerns about China’s involvement, before subsequently being given the go-ahead.

by Julian Ryall

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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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Hitachi to stump up $8.5 billion for Horizon nuclear project in Wales — Reuters

” The Japanese government and a Hitachi Ltd (6501.T) unit will compile a package worth around 1 trillion yen ($8.5 billion) for a UK nuclear power plant project, a government official involved in the project said on Thursday.

The Japan Bank for International Cooperation and the Development Bank of Japan will provide financing for the project, the official told Reuters.

The funding plans are a boost for the project, one of several new nuclear plants planned in the UK, which is aiming to replacing its aging fleet of atomic reactors.

Hitachi’s Horizon unit plans to construct at least 5.4 gigawatts of new nuclear capacity across two sites in Britain.

The funds will be provided for the first plant planned at Wylfa Newydd in Wales.

The Nikkei newspaper said Hitachi would invest about 10 percent of the expected 19 billion pounds ($24 billion) cost of the project. A Hitachi official declined to comment, saying the amount has not been announced. ”

by Takaya Yamaguchi

(Additional reporting by Kentaro Hamada; Writing by Aaron Sheldrick; Editing by Chang-Ran Kim)

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Japan’s nuclear export ambitions hit wall as Vietnam set to rip up reactor order — Japan Today

” TOKYO/HANOI — Vietnam is poised to abandon plans for Japanese firms to build a multi-billion dollar nuclear power plant, damaging Prime Minister Shinzo Abe’s drive to begin exporting reactors after the Fukushima disaster left the industry in deep-freeze at home. … ”

by Aaron Sheldrick and Ho Binh Minh

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Cancer patient compensated for Fukushima work to sue Tepco — The Asahi Shimbun

” A 42-year-old man diagnosed with leukemia after working at the crippled Fukushima No. 1 nuclear plant plans to sue Tokyo Electric Power Co., saying the utility failed to take adequate precautions against radiation exposure.

He will also sue Kyushu Electric Power Co., operator of the Genkai nuclear plant in Saga Prefecture where he had also worked, in the lawsuit expected to be filed at the Tokyo District Court on Nov. 22.

The man, who is from Kita-Kyushu in Fukuoka Prefecture, will demand about 59 million yen ($541,000) in total compensation from the two utilities.

“TEPCO and Kyushu Electric, as the managers of the facilities, are responsible for the health of workers there, but they failed to take adequate measures to protect them from radiation exposure,” said one of the lawyers representing him.

“The man was forced to undergo unnecessary radiation exposure because of the utilities’ slipshod on-site radiation management, and as a result had to face danger to his life and fear of death,” the lawyer said.

The lawyers group said the man has a strong case, citing a ruling by labor authorities in October 2015 that recognized a correlation between his leukemia and his work in response to the 2011 Fukushima nuclear disaster.

It was the first time cancer was ruled work-related among people who developed the disease after working at the stricken Fukushima No. 1 nuclear plant.

The planned lawsuit will be the first legal action against TEPCO brought by an individual whose work-related compensation claim has already been granted.

Between October 2011 and December 2013, the man worked at the Fukushima No. 1 nuclear plant to set up a cover on the damaged No. 4 reactor building and perform other tasks.

The man also did regular maintenance jobs at the Genkai plant.

His accumulative radiation exposure at the two plants came to about 20 millisieverts.

He was diagnosed with acute myelocytic leukemia in January 2014. ”

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