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Nuke crisis compensation costs tacked onto power bills to face 4 tril. yen cap



The Economy, Trade and Industry Ministry is set to limit the amount of additional costs of compensating those affected by the Fukushima nuclear crisis, tacked onto “wheeling charges” that power companies pay to use power lines, to 2.4 trillion yen, sources close to the ministry said.

The amount would eventually be added to power charges that consumers pay. Moreover, the ministry admitted that the total amount to deal with the aftermath of the nuclear disaster, which it estimates at 21.5 trillion yen, will certainly increase further.

The ministry made the disclosure at a meeting of the ruling Liberal Democratic Party (LDP) panel on the issue on Dec. 12 in response to concerns expressed by LDP legislators that the cost of dealing with the crisis could rise.

The estimated total amount of compensation for the Fukushima crisis, which had been estimated at approximately 5.4 trillion yen in 2013, has grown to about 7.9 trillion yen.

Following the outbreak of the nuclear crisis, a system has been established under which Tokyo Electric Power Co. (TEPCO), operator of the crippled Fukushima No. 1 Nuclear Power Plant, and other major power companies contribute funds for compensation payments in proportion to the outputs of their nuclear plants.

In order to secure funds to cover an increase in the total compensation cost from 5.4 trillion yen, the ministry has proposed to a panel of experts on decommissioning of the Fukushima plant and compensation payments that the additional cost be added to wheeling charges. Not only major power companies but new market entrants would be required to foot the bill, which would eventually be added to power charges paid by consumers.

The ministry explains that it aims to require market newcomers to foot part of the compensation cost in order to “prevent consumers who have benefited from nuclear power by major power companies from switching to new power companies to avoid footing the compensation cost.”

However, some experts have pointed out that such a move would run counter to the liberalization of the power market designed to spur new market entries.

Moreover, since the industry ministry is authorized to set the amount of wheeling charges at its own discretion without going through Diet deliberations, some members of the experts’ panel and the LDP have voiced concerns that the amount of compensation costs passed onto consumers could unlimitedly snowball.

In response to such concerns, the ministry is considering obligating power companies to clearly show the amount of compensation cost each consumer is required to shoulder in detailed statements on power charges. Moreover, if the amount of compensation were to increase further, the ministry would consider other measures to cover the additional cost, which could also increase the burden on consumers.

The industry ministry has also disclosed that the estimated cost of dealing with the accident, which it released on Dec. 9, does not include the expense of creating hubs for reconstructing affected areas where residents are unlikely to be able to return in the foreseeable future and that of disposing waste to be generated when fuel debris is removed from the crippled reactors.

Therefore, the estimated total cost of dealing with the aftermath of the disaster, which has almost doubled from 11 trillion yen as of 2013 to 21.5 trillion yen, will certainly increase further.


December 13, 2016 Posted by | Fukushima 2016 | , , , | Leave a comment

Japan’s New Utilities Object to Footing Part of Fukushima Bill



TOKYO — Japanese independent power providers are up in arms over a government proposal to have them shoulder some costs related to the fallout of the 2011 Fukushima Daiichi nuclear disaster, including compensating victims and decommissioning old reactors.

“Why should we have to pick up compensation costs for Tepco’s accident?” fumed a top official at a company selling electricity in the Tokyo area, referring to Fukushima Daiichi operator Tokyo Electric Power Co. Holdings.

Given the narrow profit margins involved in power retailing, new suppliers will likely pass these costs on to customers. More than half a year on from the full liberalization of Japan’s electricity retail market, just 3% or so of households have switched to independent power providers from big regional utilities that had monopolized the market. Some observers worry that forcing newcomers to take on some of the nuclear costs could further slow the glacial pace of the market expansion by taking away their price advantage.

The charges will likely be collected by adding them onto fees for using the regional utilities’ transmission infrastructure. “We won’t have any choice but to raise rates,” sighed an executive at a major independent power supplier.

Many people chose to make the jump from regional utilities as a protest against nuclear power. “It’d be tough to get customers to accept” covering nuclear-related costs, Tokyo Gas President Michiaki Hirose told reporters in October. Tokyo Gas is the largest of the new players with more than 500,000 service contracts.

Sure enough, Tokyo-area suppliers have heard complaints from such customers arguing that having independent providers cover decommissioning expenses would render their decision to switch pointless. “We’ve gotten questions from customers about whether we’re going to pay” these costs, said the head of an independent power company that focuses on renewable energy.

The government aims to scrap aging nuclear reactors while bringing newer facilities back online. One of the major new power providers acknowledges that it would be impossible to maintain nuclear power generation without support from the whole country.

But the new suppliers are demanding to know the details of Tepco’s compensation costs before they pay up. Many also argue that regional utilities should be forced to provide some cheap nuclear power to the electricity wholesale market so they will also feel pain if newcomers are forced to contribute funds.

November 6, 2016 Posted by | Fukushima 2016 | , , , | Leave a comment

Tokyo to Burden New Utilities, Public With Paying Soaring Costs of Fukushima




Struggling to curb the ever-growing cost of the fallout from the 2011 Fukushima nuclear disaster, Tokyo has come up with an idea of obliging future utility companies to pay a share of the compensation to victims, and for potential future meltdowns.

Today, Japan’s top ten conventional energy companies, including Tokyo Electric Power Company, Inc. (Tepco), which owned the Fukushima plant, are providing regular contributions to the Nuclear Damage Compensation and Decommissioning Facilitation Corp., established following the March 2011 disaster.
The Ministry of Economy, Trade and Industry (METI) proposed Wednesday that electricity companies that enter the retail electricity market after the regulatory loosening up in April 2016 will pay a share of Fukushima compensation as well, the Japa Times reported.

The agency has also designed a new system that would force Tepco, Japan’s largest electric utility, to allocate its excess profits to a fund dealing with the decommissioning of the Fukushima facilities’ reactors. Under current legislation, Tepco’s extra profits are returned to customers in the form of lowered electricity bills. METI noted that customers should have to share responsibility for the liquidation of the disaster aftermath, as they have long benefited from nuclear power. In the meantime, the costs for relieving the disaster’s consequences continue to surge. Expenditures on cleanup of the meltdown site have already exceeded the two trillion yen that the government had hoped to spend on it. By the end of the 2015 fiscal year, some 4.2 trillion yen had been spent to decommission the reactor, compensate victims and carry out radioactive decontamination at the meltdown spot.

Some 2.34 trillion yen have also been allocated to a special account for creating an interim storage facility for contaminated soil, disposal of contaminated water and for the decontamination of affected areas.

Tepco’s efforts to prevent the contamination of underground water with frozen soil barriers have not been fruitful so far, however, suggesting that new solutions and new transactions are required. METI has estimated that cleanup and decommissioning efforts will likely take more than 30 years to complete. The Fukushima Daichii plant’s reactors melted down after the Great East Japan Earthquake, followed by a disastrous tsunami. It was the most significant nuclear disaster since the Chernobyl catastrophe in 1986.


November 4, 2016 Posted by | Fukushima 2016 | , , , , , | Leave a comment

Gov’t to seek disaster compensation funds from consumers who used nuclear energy


The Ministry of Economy, Trade and Industry is considering making customers of new, smaller power companies who previously used nuclear energy from Tokyo Electric Power Co. (TEPCO) and other utilities shoulder part of the surging compensation costs for the Fukushima nuclear disaster.

Under the Act on Compensation for Nuclear Damage, nuclear power operators must each provide 120 billion yen to be used together with money paid by TEPCO and other major utilities to the Nuclear Damage Compensation and Decommissioning Facilitation Corporation to provide compensation. However, the compensation bill for the Fukushima No. 1 Nuclear Power Plant disaster continues to grow, and the compensation fund is expected to be left trillions of yen short.

The ministry takes the view that major utilities should have gathered more compensation funds from their customers, and it therefore plans to seek compensation funds from those who were previously in contracts with major power companies, using their nuclear energy.

A plan has surfaced to charge small-scale power companies more to deliver electricity through the power grids of major utilities, with the extra costs to be used for compensation. This and other plans will be debated on Nov. 2 at a working group of a ministry committee on energy reform. However, as some customers could face higher bills as a result, the move could trigger a public backlash.

November 2, 2016 Posted by | Fukushima 2016 | , , , , | Leave a comment

New Power Firms to Pay Some of the Decommissioning Costs



New power firms may have to pay some costs for nuke reactor decommissioning

The Economy, Trade and Industry Ministry has begun discussions on a plan to have new smaller electric power companies shoulder part of the costs of decommissioning nuclear reactors, officials said.

This is due to fears that nine major power companies that operate nuclear plants and the Japan Atomic Power Co. alone cannot fully foot the costs of decommissioning their reactors in the future.

The government intends to draw a conclusion on the plan by the end of the year, but the move could spark criticism that nuclear plant operators would be given preferential treatment.

The industry ministry convened the first meeting of an advisory panel on electric power system reform on Sept. 27 to discuss challenges to the liberalization of the power market. At the meeting, the ministry proposed that the costs of decommissioning nuclear reactors be added to power grid usage fees that new power supplies pay to major utilities.

If new power companies add the costs of reactor decommissioning to electricity charges, consumers will be required to shoulder such additional costs.

The industry ministry has worked out the plan, which could be viewed as a relief measure for major utilities, because the business environment surrounding these companies has worsened following the liberalization of the power market and criticism of nuclear power in the wake of the outbreak of the Fukushima nuclear crisis.

The costs of decommissioning a nuclear reactor are about 10 times that for a thermal power generator. The operators of nuclear plants use part of their income from electricity charges to save enough money to dismantle their reactors in the future.

However, if the liberalization of the electricity market progresses, a growing number of consumers could switch to new power suppliers and the prices of electric power could further decline because of intensifying competition, making it more difficult for major utilities to secure enough funds to decommission their nuclear reactors.

The suspension of operations at most atomic power stations is also adversely affecting major power companies.

Power companies could secure enough funds to decommission nuclear reactors if they saved money on the assumption that the rate of utilizing such plants stood at 76 percent and that the lifespan of each reactor was 40 years.

However, the suspension of operations at many nuclear plants has been prolonged and power companies are being forced to decommission some reactors earlier than planned, as a result of which they have been unable to secure enough funds.

Under these circumstances, major power companies are insisting that new power companies should shoulder part of the decommissioning costs.

“Customers of new electric power firms previously used power generated by nuclear plants operated by major utilities. We would like these customers to shoulder a fair share of the costs for reactor decommissioning,” an official of one major power company said.

Major power suppliers have asked the executive branch of the government and ruling Liberal Democratic Party (LDP) legislators to consider their requests.

The government has shown consideration to major power companies that are being forced to shoulder the expenses of changes in Japan’s energy policy — such as market liberalization and stepped up safety regulations — following the outbreak of the Fukushima nuclear crisis in 2011.

A working group within an advisory committee to the industry ministry called on the government in March 2015 to consider a system that would take advantage of the pricing system for power transmission and distribution to help power companies cover decommissioning costs.

However, new power suppliers are opposed to the move. “It’d be unreasonable for new electric power companies that don’t have nuclear plants to shoulder the costs of those facilities,” said an executive of a Kansai-based new power supplier.

Ennet Corp. President and CEO Tsutomu Takeda told the panel on Sept. 27, “We can’t convince our customers unless you (the government and major power companies) explain how much it will cost to decommission a reactor.”

An executive of a new power company based in the Tokyo metropolitan area said, “It’d be difficult to gain understanding from our customers who have switched from major power companies following the outbreak of the nuclear disaster.”

In response, the industry ministry will consider setting up a market in which power is traded and encouraging major utilities to supply less expensive power generated by nuclear power and coal-fired thermal power plants to the market. The ministry is aiming to allow new power companies to procure less expensive power from the power transaction market in a bid to persuade them to shoulder part of the costs of decommissioning nuclear reactors.

Under the old power supply system in which major utilities enjoyed regional monopolies, power companies were able to secure funds to build and decommission nuclear plants solely by using electricity charges, allowing them to take advantage of low fuel costs for nuclear plants.

With the liberalization of the power market, however, nuclear power plants have lost their edge.

The government has postponed discussions on whether to go ahead with the construction of new nuclear power plants.

The system proposed lately could give preferential treatment to nuclear plants and encourage power companies to build more atomic power stations.

In-depth debate needs to be held on whether nuclear plants will be consistent with the policy of liberalizing the power market.

Related article from September 8, 2016

Gov’t may shift nuke accident, reactor decommissioning costs onto new power suppliers

The government is moving to bill new electricity suppliers for a portion of nuclear reactor decommissioning costs and compensation payments related to the Fukushima nuclear disaster, it was learned on Sept. 7.

After decades under regional utility monopolies, the electricity supply market was opened to competition in April this year. The government apparently fears that the old monopolies such as Tokyo Electric Power Co. (TEPCO) lose too many customers to new suppliers and they may no longer be able to cover the high costs of decommissioning old reactors or compensate the victims of nuclear accidents, hence the move to shift some of the financial burden onto new market entrants.

However, these costs were originally supposed to be covered by the nine big utilities, and the government’s moves would essentially transfer that burden onto the Japanese people, making a clash more than likely.

Under the current system, large utilities must cover nuclear reactor operating expenses — including eventual decommissioning — from electricity bill income. Also, TEPCO receives monies to cover Fukushima nuclear disaster compensation claims from the government-licensed Nuclear Damage Compensation and Decommissioning Facilitation Corp. (NDF), which is in turn funded by all the large utility companies.

The new system being considered by the government would spread the financial burden of nuclear accident compensation and reactor decommissioning to new electricity suppliers, lightening the load on the big utilities. The government estimates the total cost for reactor decommissioning plus Fukushima nuclear disaster compensation paid before the NDF was established at some 8 trillion yen. The new power suppliers would likely pass on their share of these costs to their customers, resulting in monthly power bills up to about 200 yen higher than at present for an average three-person household.

However, forcing customers of the new electricity firms to pay for the old utilities to decommission their reactors and for TEPCO’s nuclear disaster liabilities runs counter to the goals of liberalizing the electricity market, which was intended to push down prices through competition. It would also in essence be corporate welfare for the big utilities operating nuclear plants.

A sub-committee to debate the new system will be established under the Advisory Committee for Natural Resources and Energy reporting to the minister of economy, trade and industry. The committee will decide on what direction to take by the end of this year, with an eye to submitting a bill to revise the Electricity Business Act to the ordinary Diet session next year.

September 28, 2016 Posted by | Japan | , | Leave a comment