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Ministry Devises Crafty Finance Scheme Favoring Nuclear Power


The industry ministry, the supposed champion of electricity market deregulation, is making a move that runs counter to the principles of reform by giving preferential treatment to nuclear power.

A proposal by the Ministry of Economy, Trade and Industry would force new electricity suppliers that have entered the market in response to its liberalization to shoulder part of the costs of decommissioning the crippled Fukushima No. 1 nuclear power plant.

The plan was submitted to an expert council discussing the issue.

The ministry, which regulates the power industry, has already presented a plan to make such new utilities bear part of the costs of decommissioning aging reactors at other nuclear power plants.

The power market reform, which was expanded this spring to cover retail electricity sales as well, is designed to abolish the regional monopolies of established utilities, thereby encouraging new entries into the market.

It is also aimed at lowering electricity rates by separating the operations of power plants and transmission grids to promote fair competition.

The ministry cannot claim it is working for fair competition if it is now creating rules that force new electricity providers that have nothing to do with any nuclear power plant or the 2011 Fukushima nuclear disaster to pay part of the decommissioning bills.

In its attempt to get new utilities involved in the financing plan, the ministry is targeting the fees they pay to use the power transmission lines operated by established utilities.

The total cost of decommissioning the stricken Fukushima nuclear plant is estimated at several trillion yen.

The ministry has stressed its intention to protect the public from the huge financial burden. It has promised to make Tokyo Electric Power Co., operator of the Fukushima plant, pay for the work by saving necessary funds through streamlining its operations.

But the ministry has proposed a new system to use the money saved from more efficient power grid operations primarily to cover decommissioning costs.

The current rule requires major utilities to lower the charges they impose on smaller power suppliers using their transmission lines when higher efficiency lifts their profits. But the proposed system would exempt the big power companies from the rule when they spend the money saved on decommissioning reactors.

The ministry seems to be trying to convince the public that this approach would not increase the financial burden on consumers because it doesn’t involve price hikes.

But this idea raises some questions that cannot be overlooked.

The costs of decommissioning reactors are by nature expenses related to power generation. But the ministry’s proposal would transfer part of the expenses to the operations of transmission lines.

As a result, new power suppliers using TEPCO’s transmission cables would have to pay higher fees.

Subscribers to such new utilities would also have to shoulder part of the burden. In particular, the envisioned system would be totally unacceptable for consumers who have switched to new power providers to avoid using electricity generated by nuclear plants.

The ministry appears to be targeting an “easy source” of revenue. The charges on using transmission lines are not highly visible to general consumers.

The ministry’s plan to use power transmission charges as a source of funds to decommission reactors is a crafty scheme to give preferential treatment to nuclear power. Its aim is to ensure nuclear plants will not lose their cost competitiveness against other electricity sources like thermal power generation.

For many years, both the government and established utilities have been emphasizing that atomic energy is a low-cost source of electricity.

They are grossly irresponsible and insincere if they are trying to impose part of the inevitable cost burden of decommissioning reactors on competitors.

The ministry should rethink the idea from the viewpoint of the basic principles of market deregulation.

November 8, 2016 Posted by | Japan | , , | Leave a comment