Fulfilling duties to Fukushima must top list in TEPCO reform

A new plan has recently been worked out for rehabilitating Tokyo Electric Power Co. Holdings Inc. (TEPCO), the embattled operator of the crippled Fukushima No. 1 nuclear power plant.

The plan is centered on a bold management reform for enhancing the utility’s earning capacity so it can cover the ballooning expenses related to the Fukushima nuclear disaster of 2011, including the payment of damages and the cost of scrapping the hobbled nuclear reactors.

TEPCO obviously has the duty to fulfill its responsibility to the people and communities affected by the disaster. But the plan has set profit targets that are anything but easy to achieve, and some of the components of the plan appear unlikely to be realizable any time soon.

There is a need to continue reviewing the plan so it will not end up as simply pie in the sky.

TEPCO came under de facto government ownership after it could no longer keep operating on its own as a result of the Fukushima nuclear meltdowns. The utility has since been paying damages and otherwise dealing with the aftermath of the disaster while receiving aid in various forms under government supervision.

It was learned late last year that post-disaster processing would cost twice as much as the previous estimate. The government worked out a framework, wherein about 16 trillion yen ($141 billion), out of the total expense of some 22 trillion yen, would be covered either by TEPCO or with profits from the sale of the government’s share in TEPCO.

The rehabilitation plan, which was revised in response thereto, envisages that TEPCO can come up with 500 billion yen in necessary expenses annually over the coming three decades. It also sets the goal of substantially increasing TEPCO’s profits.

Many questions linger, however.

A restart of the idled Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture, which is expected to be the key instrument for TEPCO’s turnaround, is unlikely to be feasible any time soon. The governor of Niigata Prefecture and others are growing increasingly distrustful of TEPCO, as it recently came to light that the company had failed to inform the government’s Nuclear Regulation Authority that one key building on the nuclear plant site is not sufficiently anti-seismic.

The first order of business is to take thorough safety measures. TEPCO should come up with ways for generating the necessary financial resources without relying on a restart of the nuclear plant.

The centerpiece of new measures for enhancing TEPCO’s earning capacity is a prospective reorganization of its operations along segment lines, such as in the field of power transmission and distribution and in nuclear power operations, which would also involve other utilities. That apparently came against the backdrop of the industry ministry’s hopes that TEPCO’s realignment will trigger a reform of the entire energy industry.

Other major electric utilities, however, are wary of the risk of having to play a part in TEPCO’s response to the nuclear disaster. It therefore remains uncertain whether the reorganization will actually take place as envisaged.

The framework for sharing the burdens of post-disaster processing, which the government has worked out as a precondition for the new plan, is in the first place ridden with problems.

The framework envisages that new entrants to the power supply market, who operate no nuclear reactors, will also have to pay part of the disaster response costs. Critics continue to argue such a plan is about passing the bill on to irrelevant parties.

The 4 trillion yen in radioactive cleanup fees are designated for being covered by profits on the sale of TEPCO shares. But that plan could fail unless TEPCO’s earnings were to expand and its share price were to grow significantly.

Using taxpayers’ money to fill the hole would then emerge as a realistic option.

TEPCO was allowed to stay afloat at the expense of taxpayers on the sole grounds that it bears heavy responsibility to the people and communities affected by the Fukushima disaster.

The government would have to take another step forward if TEPCO were unable to fulfill that responsibility. That would also fuel the argument for dismantling the embattled utility.

TEPCO is expected to soon make a fresh start under a reshuffled management. The utility and the government should not forget about the exacting eyes of the public.

http://www.asahi.com/ajw/articles/AJ201705150018.html

May 17, 2017 Posted by dunrenard | Fukushima 2017 | Fukushima Daiichi, Nuclear Disaster, Responsibility, Tepco | Leave a comment

As I See It: Six years later, no time for TEPCO personnel squabbles

Former Hitachi Ltd. chairman Takashi Kawamura, left, who will take the post of the next chairman of Tokyo Electric Power Company Holdings Inc., and Tomoaki Kobayakawa, who has been tapped to be the next TEPCO Holdings president, are pictured here in Tokyo’s Chiyoda Ward on April 3, 2017.

Six years since the outbreak of the nuclear disaster at Tokyo Electric Power Company (TEPCO) Holdings Inc.’s Fukushima nuclear plant, the utility still faces massive challenges. And yet, what I’ve come to see through my reporting is that efforts meant to help revitalize the company’s finances in order to secure the funds needed to bring the nuclear crisis under control and compensate victims, have been overshadowed by petty feuds over personnel appointments between executives dispatched by the central government — which effectively owns the company — and dyed-in-the-wool TEPCO employees. Rebuilding TEPCO will be impossible if such squabbles are not put to rest.

In March of this year, TEPCO announced an outline of its revitalization plans, with a restructuring of its nuclear power business as a central pillar, as well as a reshuffling of executive personnel. According to the announcement, chairman Fumio Sudo, 76, will be replaced by Takashi Kawamura, 77, the previous chairman at Hitachi Ltd., and president Naomi Hirose, 64, will be replaced by 53-year-old board director Tomoaki Kobayakawa.

After the nuclear crisis began in March 2011, TEPCO was effectively nationalized. The plan has been for TEPCO to increase its earning power by rebuilding its finances under the central government’s management, so that it could secure the funds necessary to decommission the reactors at Fukushima No. 1 Nuclear Power Plant and compensate victims of the disaster.

With the nationalization of TEPCO, the government swept the utility clean of all its old executives and in addition to placing bureaucrats from the Ministry of Economy, Trade and Industry (METI) on the company’s board, in 2014 it put Sudo, formerly of major steel corporation JFE Holdings, in the position of TEPCO chairman. However, when Sudo, with the backing of the government, implemented cost-cutting measures, grumblings were heard within the company that Sudo was seeking too many results too fast and that staff evaluations were changing too dramatically. Sudo’s clashes with TEPCO president Hirose, who had worked up the ranks and was initially considered pro-reform, grew increasingly serious.

There was an incident in the spring of 2016 that could be considered a prelude to current conflicts. Sudo and METI, unhappy with the fact that Hirose would not cut his ties with former management, tried to re-appoint him to the post of deputy chairman. Hirose resisted and, according to multiple sources involved with TEPCO, was able to get the support of a former TEPCO executive who had close ties with the prime minister’s office. As a result, Hirose stayed in his post as company president, but his relationship with Sudo deteriorated beyond the point of repair. “It wasn’t uncommon for the two to criticize each other openly at management meetings,” a senior TEPCO official said.

At the end of 2016, METI announced that the amount of money necessary to deal with the nuclear crisis would be about 21.5 trillion yen, almost twice the amount of an earlier estimate. Because of the need to secure more funds, the government set up an expert panel, which then offered “recommendations” to TEPCO on how to rebuild its finances. When it was revealed that “the passing of authority down to the next generation” was one of the pieces of advice offered by the panel, industry insiders saw it as another government attempt at bringing Hirose down from his post, a source close to the case said.

Hirose is said to have resisted strongly to such renewed efforts. However, Sudo vowed that he would step down if Hirose did, forcing Hirose to bow to the pressure to resign. Some in the electric power industry have described the latest personnel reshuffle a “tie” in that both “camps” made concessions, but discontent is already spreading among career TEPCO employees. According to a senior TEPCO official, new executives, including Kobayakawa and the new president of a subsidiary company, are “all drinking buddies of outside board members who are former METI bureaucrats.”

TEPCO can’t afford to waste time on personnel feuds. In order to come up with the money needed to bring the troubled reactors under control, TEPCO must earn 500 billion yen per year for the next 30 years. The amount goes up further when taking into account the funds needed for capital investment. Meanwhile, TEPCO’s consolidated financial results for fiscal 2016 stood at just 258.6 billion yen in operating income.

TEPCO’s outline of its latest reorganization plan shows that it is aiming to raise earning power by realigning its various businesses, such as nuclear power, as well as the transmission and distribution of power, with other utilities. However, this plan is a carbon copy of the recommendations given by the government-established expert panel. Some long-time TEPCO employees have said the company only included the recommendation into its reorganization plan because the government has been on its back to do so, and that because other utilities will find no benefit to them in restructuring with TEPCO, the plan will never come to fruition. If people in the company remain this divided, TEPCO will never be able to follow through with rigorous reforms.

If TEPCO drops the ball on management reform and is unable to come up with the money it needs, it could lead to further burdens on the public in the form of higher electricity prices. TEPCO, under normal circumstances, would have gone under following the onset nuclear disaster. So if things go further south, not just the utility, but the central government, which allowed the utility to survive by pumping 1 trillion yen from national coffers into the company, will be held accountable.

Kawamura, who will be appointed TEPCO’s new chairman at the company’s general meeting of shareholders in late June, has the experience of having accomplished Hitachi’s v-shaped turnaround through fundamental management reforms. While his appointment was initiated by the government, many TEPCO employees welcome Kawamura’s pending appointment. The latest personnel change may be the last chance for TEPCO and the government to put its differences aside toward the goal of rebuilding the troubled power company.

Looking back at the latest personnel power struggle, a senior TEPCO official said, “I’m embarrassed when asked if any of the people involved (in the debacle) had ‘our responsibility toward Fukushima’ in mind.” The government and TEPCO must not forget its responsibility toward the victims of the nuclear disaster. If they focused on the fact that there are people out there whose peaceful lives in their beloved hometowns were taken away from them, they could refrain from feuds over personnel appointments. (By Daisuke Oka, Business News Department)

https://mainichi.jp/english/articles/20170512/p2a/00m/0na/014000c

May 17, 2017 Posted by dunrenard | Fukushima 2017 | Fukushima Daiichi, Nuclear Disaster, Responsibility, Tepco | Leave a comment