Tepco mandated to create fund for scrapping Fukushima plant — The Japan Times

” The Diet passed a bill Wednesday requiring Tokyo Electric Power Company Holdings Inc. to put aside extra funds to decommission its crisis-hit Fukushima nuclear power plant, as the state seeks to gain more financial control over the utility.

Under the revised law, the state-backed Nuclear Damage Compensation and Decommissioning Facilitation Corp. will also be involved in the decommissioning process.

Currently, Tepco has been using profits to pay for scrapping the Fukushima No. 1 plant, which was destroyed after a 2011 earthquake and tsunami triggered a triple meltdown.

The revised law is expected to take effect later this year. With the estimated cost of the decommissioning work already surging to ¥8 trillion from the previously forecast ¥2 trillion, a government panel has called for setting up a funding system that is not dependent on the company’s financial health.

The government projects the total cost to deal with the Fukushima nuclear disaster will reach ¥21.5 trillion, including decommissioning costs, compensation and decontamination work.

Under the new program, the state-backed organization will decide on the amount Tepco should store away each business year and the industry minister must approve it.

The utility must also formulate a financial plan and obtain the minister’s approval when it uses the reserve fund for its decommissioning work.

The new law will strengthen the monitoring power of authorities as well, enabling the industry ministry and the organization to conduct on-site inspections to check whether Tepco is putting aside the money.

The government has a major say in the utility’s operations after acquiring 50.1 percent of the company’s voting rights. Tepco faces huge compensation payments and decommissioning costs among other problems due to the 2011 disaster.

The industry ministry has projected roughly ¥300 billion will be needed annually for the next 30 years to complete the scrapping of the power plant, which involves the difficult procedure of extracting nuclear debris.

The costs could grow further. A study by a Tokyo-based private think tank has shown the bill for the decommissioning could balloon to between ¥11 trillion and ¥32 trillion assuming materials from the No. 1 to 3 reactors, which suffered core meltdowns, need to be specially treated for radioactive waste.

The Japan Center for Economic Research estimated the total cost of managing the disaster could reach ¥70 trillion, more than three times the government calculation. ”

by Kyodo, The Japan Times

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Panel begins debate on reducing operators’ liability for nuclear accidents — The Japan Times

” The Japan Atomic Energy Commission has started full discussions by experts on whether to limit the liability of nuclear plant operators to pay compensation in the event of an accident.

Currently, nuclear operators in Japan bear unlimited liability for damages, but some experts say a ceiling of their responsibility is needed.

The discussions are expected to be heated, as limiting liability would raise the problem of how to compensate people and businesses affected by a nuclear crisis.

For the March 2011 catastrophe at the Fukushima No. 1 plant, Tokyo Electric Power Co. is facing full liability under the nuclear compensation law.

Because Tepco can’t afford paying off all compensation demands while also funding decontamination work, the government has set aside ¥9 trillion in assistance.

The money is provided to Tepco through Nuclear Damage Compensation and Decommissioning Facilitation Corp., a public-private organization. Tepco is to repay the money over time.

The electric power industry has been pushing for a cap on nuclear plant operators’ liability for compensation.

“If the sky’s the limit for compensation, we cannot project an outlook for our nuclear energy business,” a senior official at a major power utility said.

In line with the government’s policy of continuing to promote nuclear energy, an expert panel of the Japan Atomic Energy Commission started debate last year on problems with the current compensation regime.

Some panel members argued for a limited liability system.

“Shouldering risks that go beyond the limit of the private sector will impede fund procurement by electric power companies,” one member said.

On the other hand, another member said, “Limited liability is not an option, considering the current situation in Fukushima.”

There are also concerns that a narrower scope of responsibility for power companies could be detrimental to their commitment to safety.

With the panel sharply divided, a government official said a conclusion is not expected soon.

The expert panel plans to produce a report next year, and the government will subsequently start working on any necessary amendments to the nuclear compensation law.

Even if the nuclear compensation system is revised, past accidents would not be covered by the changes.

Among countries that impose such liability limits, the United States sets the maximum liability at $12.6 billion and Britain has a ceiling of £140 million ($199.7 million), according to the Japan Atomic Energy Commission. Under the U.S. system, if the scale of nuclear damage exceeds the limit, the president is supposed to propose a supplementary compensation program to Congress. ”

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Tepco’s index-topping gains fueled by electricity shake-up — The Japan Times

” Japan’s reform of its energy market is proving a boon to investors in the company at the center of the Fukushima No. 1 nuclear plant disaster.

Tokyo Electric Power Co.’s shares have surged 59 percent in the six months through Tuesday’s close, making it the best performer on the Nikkei 225 Stock Average and the 174-member Bloomberg World Utilities Index.

Tepco, owner of the wrecked plant, is seen as an early beneficiary of government-backed power reform. By April, residential power customers will be able to choose their provider for the first time. And by 2020, utilities will be required to separate their transmission, distribution and retail businesses.

“Looking towards the electricity market reform to be completed by 2020, a company the size of Tepco is an attractive investment,” Mana Nakazora, an analyst at BNP Paribas Securities (Japan) Ltd., said by email.

While the company’s stock price has surged this year, it is still less than half of where it was before the Fukushima disaster. The shares fell 3.1 percent to ¥751 at the close of Tokyo trading on Tuesday. They closed at ¥2,153 the day before Fukushima, but have increased 55 percent since Tepco announced on May 1 that it will transition to a holding company beginning in April.

Tepco was rated new overweight on Tuesday with a target price of ¥1,000 a share by Yuji Nishiyama, an analyst at JPMorgan Securities Japan Co.

Spokesman Tatsuhiro Yamagishi declined to comment on the performance of the company’s stock.

For Tepco, a more open energy market in Japan offers the opportunity for growth at a company whose survival was in question just a few years ago. The Fukushima disaster put it on the verge of default, with the head of Japan’s biggest stock market telling the company to file for bankruptcy protection. Tepco was saved by a ¥1 trillion infusion from the government in 2012, the nation’s largest bailout since the 1990s.

The power company received ¥5.61 trillion from the state-backed Nuclear Damage Compensation and Decommissioning Facilitation Corp. to deal with payouts to victims of the Fukushima meltdown, Tepco reported last month.

Under the April reorganization, Tepco’s nuclear operations will be placed into a holding company, while debt investors will be repaid from the funds of a spun-off power grid company.

Tepco’s probability of debt nonpayment has dropped to 0.309 percent from about 1.121 percent on Oct. 16, according to the Bloomberg default-risk model, which considers factors such as share prices and debt. The probability of debt nonpayment was as high as 6.156 percent in 2012.

“The company’s default risk has disappeared,” said BNP Paribas’s Nakazora.

The government’s power reform began this year with the creation of an organization to manage the nation’s supply and demand balance. Next year’s full retail liberalization, the second stage of the reform, will allow utilities to more freely expand outside their traditional regions. The government aims to remove rate regulations by 2020.

A drop in fuel costs saw Tepco increase operating profit threefold in the quarter ended June 30. The price of liquefied natural gas imported into Japan fell to a six-year low in June, while crude oil prices are near a record low.

“Investors expected first-quarter profits to have a big increase due to the drop in oil then liquefied natural gas,” Syusaku Nishikawa, a Tokyo-based analyst at Daiwa Securities Co., said by email.

Yet challenges remain. Liabilities related to the Fukushima disaster and Tepco’s responsibilities will continue to pressure the company’s credit quality in the long term, according to Mariko Semetko, a vice president at Moody’s Japan K.K., which rates the company’s outlook as negative.

Tepco, which operates the world’s biggest nuclear plant by capacity at its Kashiwazaki-Kariwa facility in Niigata Prefecture, has yet to restart any of its nuclear reactors. Resuming operations at the facility would boost profit by as much as ¥32 billion a month, the company has said.

“The recent improvements in profitability are definitely a plus,” Semetko said by phone. “But the company hasn’t yet started its Kashiwazaki-Kariwa plant and there are a lot of uncertainties around costs related to Fukushima. With all of that in mind, we haven’t been able to stabilize the outlook yet.” ”

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Editorial: New technology to help resolve Fukushima nuclear crisis needs gov’t backing — The Mainichi; South China Morning Post

” The Japanese government has once again revised the work schedule for decommissioning reactors at the triple-meltdown-stricken Fukushima No. 1 nuclear plant. The last major change was in June 2013, and this one pushes back the removal of spent fuel rods from the fuel pools of the No. 1-3 reactors by as much as three years. The delay is due to unexpected difficulties preventing the escape of airborne radioactive contaminants during decontamination and wreckage clearing work.
Decommissioning reactors at the heart of one of the world’s worst nuclear disasters is of course bound to be extremely difficult, and this reality is coming into sharp relief.

Progress on dismantling the Fukushima reactors has a direct bearing on both overall regional disaster recovery and when local residents will be able to finally return home. As such, we call on both the government and plant operator Tokyo Electric Power Co. to develop a reactor decommissioning strategy with a solid strategic foundation, and to thoroughly release information on the process.
The latest revisions to the decommissioning work schedule were based on the basic principle of putting the safety of locals and plant workers first. The first version of the work schedule was obsessed with speed. The result was a rash of worker injuries and deaths and other problems that ended up causing progress to be delayed. Rather than making speed top priority, it’s more important to carefully and surely reduce the various risks related to the Fukushima plant.

The jobs with the highest priority under the work plan’s latest iteration are the recovery of nuclear fuel rods from the fuel pools, and dealing with the vast quantities of radioactively contaminated water produced at the plant. Though these tasks are certainly important, the most difficult hurdle in the decommissioning process will be extracting the melted fuel from inside the stricken reactor vessels. Under the new schedule, this is set to start on just one of the reactors sometime in the year 2021.

That’s some six years away, but the path from here to there remains foggy at best. First of all, no one knows for sure exactly what state the fuel is in or even where it is in the reactor housings.

The method for getting the fuel out is also up in the air. At first, planners thought it best to fill the reactor vessels with water to suppress the intense radiation when the operation began. This fell by the wayside, however, when it turned out to be difficult to identify damaged spots on the reactor vessels and stop water from escaping. Now, an in-air removal method is being considered, though entirely new equipment will need to be developed to perform the operation in the highly radioactive environment while at the same time preventing contaminants from getting airborne.

There are a number of research institutes and universities across Japan that are receiving government support to invent the technology needed for this reactor decommissioning work. The “control tower” for these efforts is the Nuclear Damage Compensation and Decommissioning Facilitation Corp. (NDF), created by the government in August last year. The corporation is tasked with overseeing each project from basic research through to practical application, and to optimize the development process.

The NDF, however, has just 35 or so technical staff. It’s an open question whether the NDF can exercise effective oversight for such a wide program with so few people. The government is trying to enhance the corporation’s functions, but there have been no concrete measures forthcoming so far. At this rate, might the 30-40 year target to decommission the Fukushima reactors come under serious pressure?

Prime Minister Shinzo Abe has said more than once that “the national government stands on the front lines” of the efforts to deal with the decommissioning work. Then more than ever, the government must create a system to provide full and complete support for the technology research and development projects needed to finally bring the nuclear crisis to an end. ”

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Also read a similar article by the South China Morning Post: “Scale of Fukushima clean-up revealed as decommissioning ‘road map’ is revised

Three methods proposed for removing melted fuel from Fukushima No. 1 reactors — The Japan Times; The Yomiuri Shimbun

” FUKUSHIMA – The Nuclear Damage Compensation and Decommissioning Facilitation Corp. on Thursday proposed three methods for retrieving highly radioactive nuclear fuel debris in three crippled reactors at Tokyo Electric Power Co.’s disaster-stricken Fukushima No. 1 nuclear power plant.

The proposals, presented at a meeting of officials from Tepco, the central government and municipalities in Fukushima Prefecture, will be reflected in a decommissioning road map that the government and Tepco are set to release around May.

The three reactors underwent core meltdowns in March 2011, leaving melted nuclear fuel debris on the floor of their containment vessels. The decommissioning aid body hopes to establish concrete procedures by the first half of fiscal 2018.

One of the three proposed methods removes the debris in a submerged condition, with a containment vessel filled with water to shield against radiation and prevent the spread of radioactive materials during the retrieval process.

An alternative dry method carries out the retrieval in a partially submerged condition, with water used only when the debris is cut loose from the vessel floor. The debris would be removed from either the top, under one plan, or the side of the vessel, under another.

The submersion method requires the reactor damage to be accurately identified and repaired before water is poured in. The dry method, on the other hand, requires continuous cooling of the retrieved debris and measures to prevent radioactive materials from scattering.

Radiation levels at the three reactors are so high that workers have been unable to approach their containment vessels or identify the location of the debris. All the three methods call for an assessment beforehand of radiation contamination as well as decontamination procedures.

Tepco plans to begin inspections of reactor 1 Friday using robots mounted with cameras and radiation-measuring equipment. ”

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Read a related article by The Yomiuri Shimbun

Tepco compensation to cost taxpayers more than previously estimated — The Japan Times

” Maximum interest payments to financial institutions by the government related to helping Tokyo Electric Power Co. pay compensation over the nuclear disaster are projected to total ¥126.4 billion, up some ¥50 billion from an estimate in October 2013, according to the Board of Audit.

If the financial aid for compensation payments related to the crisis at the Fukushima No. 1 nuclear plant reaches a limit of ¥9 trillion, the government will take up to 30 years to collect the funds, the board said Monday in its latest estimate.

Because the interest payments may rise further, depending on Tepco’s financial conditions, the board said that the company needs to boost its efforts to improve its finances and corporate value.

It was the board’s second audit of Tepco.

After the upper limit for government financial aid was raised from ¥5 trillion to ¥9 trillion in December 2013, the board recalculated other figures based on the status as of the end of 2014.

According to the board, aid to Tepco for compensation payments totaled ¥4.534 trillion as of the end of last year.

Meanwhile, a total of ¥189.2 billion in taxpayer money has been spent since fiscal 2011 on decommissioning the nuclear facility and dealing with the buildup of radioactive water, the Board of Audit said.

The board also said Tepco has allocated a massive amount of money for radioactive water treatment facilities and tanks that functioned only for a short period of time, with the amount totaling around ¥68.6 billion.

Tepco has spent some ¥32.1 billion on equipment to remove radioactive cesium from tainted water at the crippled plant, but the facilities stopped operating three months after the start of operations in June 2011, due mainly to equipment failure.

The utility also spent ¥16 billion to build more than 100 tanks for storing radioactive water at the plant. But these are now being replaced with more reliable containers after around 300 tons of highly tainted water was found to have leaked from one of the tanks in 2013.

“The government should give sufficient consideration to ensuring the recovery of the state funds and boosting Tepco’s corporate value” to reduce the burden on taxpayers, the board said, urging Tepco to make further cost-cutting efforts.

The government plans to collect funds for the financial aid from the sale of Tepco shares, contributions by nuclear power plant operators, special payments by Tepco and government subsidies to the Nuclear Damage Compensation and Decommissioning Facilitation Corp.

The board’s estimate is based on the assumption that Tepco pays ¥50 billion, or half of its pretax profit, in its annual special contribution.

To calculate interest payments and how long it will take to collect the funds, the board also assumed that Tepco shares will move between ¥750 and ¥1,350 apiece.

The latest estimate shows that the government will finish collecting the funds as early as 2032, with interest to be paid to financial institutions totaling ¥89.2 billion, or as late as 2044, with interest reaching ¥126.4 billion.

The previous estimate found that the interest would total between ¥37.4 billion and ¥79.4 billion if Tepco receives maximum aid of ¥5 trillion.

The board also said that it will take much longer to collect the funds because Tepco has failed to resume operations at its Kashiwazaki-Kariwa nuclear plant, as assumed in the estimate, and the Tepco share price currently stands below ¥500, far lower than the prices projected in the estimate. ”

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