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So who will foot the bill if another nuclear disaster strikes Japan?

may 2012.jpg
From left: The No. 1 to No. 4 reactors of the Fukushima No. 1 nuclear power plant in May 2012
November 1, 2018
The government is trying to wriggle out of overhauling the way compensation should be paid out for damages caused by a nuclear accident.
A working group of the government’s Atomic Energy Commission had been considering ways to bolster the system, including raising the amount of losses covered by insurance, but failed to produce a formal proposal. The commission apparently failed to obtain support for these ideas from the electric power and insurance industries.
The panel started reviewing the system in the aftermath of the 2011 Fukushima nuclear disaster.
Nearly eight years have passed since the catastrophic triple meltdown at the Fukushima No. 1 nuclear power plant, yet serious problems and flaws remain unaddressed with the current system. The government clearly has no intention of tackling them anytime soon.
The Abe administration and the power industry are pushing to restart offline reactors, which is a very irresponsible move.
The current system for compensation requires operators of nuclear plants to sign contracts with both private-sector insurers and the government to finance payouts related to nuclear accidents.
But these contracts are good for only up to 120 billion yen ($1.06 billion) per nuclear plant. This is way too small, given that compensation payments related to the Fukushima disaster have already surpassed 8 trillion yen.
In the case of Tokyo Electric Power Co., the operator of the Fukushima facility, it quickly became clear that the company could not raise the necessary funds on its own. This prospect prompted the government to create a makeshift program to support such payouts.
Under this system, the government first pays compensation and then recovers the money over a period of decades from TEPCO and other major electric utilities.
The government’s rationale is that utilities must work together to fork up funding for the system in light of the massive sums required. This system is supposed to swing into action if another major nuclear accident occurs.
But it is hard to claim that a system based on mutual aid among competitors is sustainable, given the growing competition due to the liberalization of the power retail market.
It is time to find an answer to the weighty, complicated question of how the financial burden of preparing for nuclear accidents and paying compensation for losses should be shared among electric power companies, their stakeholders and the government.
Operators of nuclear power plants have an obligation to provide against nuclear emergencies.
As a first step, insurance coverage for accident-caused losses should be sharply raised.
The government needs to continue working with related industries to work out a specific plan.
It should also consider how to deal with the prospect of a power company going under in the event of a serious accident. If such a thing were to happen, the government would probably have to play the leading role in paying compensation. But it would still need to get the shareholders and financial institutions involved to cough up their fair share of the burden.
Increased insurance premiums paid by major electric utilities could cause electricity bills to rise. But it would help make more accurate assessments of the real costs of nuclear power generation, which both the government and the power industry have claimed to be lower than those of alternative energy sources.
At the root of the troubled history of policy efforts to address the issue of compensation is the ambiguous nature of the government’s nuclear power policy. This is borne out by the way it took the initiative in promoting nuclear power plants operated by private-sector companies.
Should nuclear power generation continue despite the potential risks and social costs? If another severe nuclear accident occurs, who should take the responsibility for dealing with the aftermath and in what ways?
These are just some of the fundamental questions about nuclear power policy raised by the need to revamp the compensation system.
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November 3, 2018 - Posted by | Fukushima 2018 | , ,

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