nuclear-news

‘ Regulated Asset Base’ system mulled in Japan to add nuke plant construction costs to rates

THE ASAHI SHIMBUN, by Chinami Tajika and Aki Fukuyama. July 24, 2024,  https://www.asahi.com/ajw/articles/15359689

The Finance Ministry is considering introducing a system that would allow construction costs of new nuclear power plants to be added to electricity rates, which could be passed onto consumers. 

By doing so, the ministry aims to promote the construction of new nuclear plants.

Electric power companies are reluctant to invest in nuclear plants because the cost of safety measures is ballooning due to the 2011 disaster in Fukushima, and they no longer have the means to ensure recouping construction costs.

The central government has said that it will increase decarbonized power sources to prepare for future increases in demand, but that could lead to a major increase in the burden on the public.

According to sources, the “RAB model,” a nuclear plant support measure devised in Britain, will be used as a reference.

When construction of a nuclear plant is approved by the government, the construction and maintenance costs are borne by the retail electricity company once construction has begun. The cost will be recovered through a hike in electricity rates.

Under the model, any increase in construction costs can be included in the fee if the cost is deemed necessary. If the project is suspended, the government will compensate by providing funds.

If the system is introduced directly to Japan, it will be up to retail companies, including new power companies, to decide whether to pass the charge directly to customers.

However, even those who opt for a 100 percent renewable electricity supply may pay for the construction of a nuclear power plant.

In the past, there was a mechanism to ensure that the construction costs of power plants and transmission and distribution networks could be recovered by factoring them into electricity prices.

But with the deregulation of the electric power industry that began in 2000, this system was gradually eliminated, and power plants that were not cost-effective were closed and investment in new power plants was suppressed.

July 26, 2024 - Posted by Christina Macpherson | business and costs