Should TEPCO continue to exist?
Commentary ( 15 )
TOKYO —
The Fukushima Daiichi nuclear accident has highlighted the unclear responsibility for Japan’s national energy policies, particularly concerning nuclear power. The Kan administration, in dealing with the nuclear accident and preparing a compensation scheme, maintained its stance of avoiding taking final responsibility.
The compensation scheme prepared by the government in May holds the Tokyo Electric Power Company (TEPCO), a private company, primarily responsible for compensation while the government is to provide TEPCO with so-called “logistic support.” Since the compensation scheme does not set an upper limit on the total amount of compensation to be paid by TEPCO, its liabilities for nuclear damages are bound to persist for decades. As a result, in terms of financial and human resources, TEPCO’s performance as an electric utility will be seriously compromised.
Even though the government is allowed to provide the utility with financial aid in exceptional cases, such as when “the stable supply of electric power is endangered,” any initiative for such aid, like any other initiative for actually implementing the Act on Compensation for Nuclear Damage, is likely to be met with strong resistance against the spending of public money. Moreover, financing from private entities and the issuing of corporate bonds may become impossible. As long as the government continues to adhere to the chosen policy of private companies continuing nuclear power generation, the compensation scheme in its present format is not sustainable. The scheme must be reviewed and modified within the next few years.
When reviewing the compensation scheme, the following two points should be considered. Firstly, the victims should not be left in a helpless state, which requires a new mechanism for the government and TEPCO to assume joint responsibility for compensation. To remove the vagueness that has existed since the Act on Compensation for Nuclear Damage was established, clear decisions should be made concerning the sharing of responsibilities between the government and utility. To help decide how much compensation should be made and by whom, the cause and effect relationships should be studied by an independent investigation committee. The payment should be handled by the government by issuing compensation bonds, and TEPCO should then reimburse the amounts determined by the investigation in a manner that will not make the company insolvent.
Secondly, the government should help finance electric utilities that are legally obliged to continue supplying electricity. Since TEPCO must continue to pay compensation for a long period, it is difficult in practice for the company to find new sources of financial support. Moreover, the compensation scheme produced by the government requires other electric utilities to bear part of the compensation costs. This arrangement is not prescribed by the Act, and the careless reliance on an arrangement like this will hit private investment and financing for other electric utilities as well.
We must calmly consider whether TEPCO should continue to exist in order to pay compensation for as long as several decades. Sentencing TEPCO to life imprisonment in this way will delay its recovery as a private company, undermine the motivation of its employees and make it difficult to attract staff, thus causing its core business of supplying electricity to deteriorate. A more reasonable approach would be to split the company in the near future into an organization in charge of compensation and an organization responsible for continuing to supply electricity.
If TEPCO is split into two organizations, one for taking over compensation liability and another for pursuing new investment in power generation, the latter organization should be made to do business on a greater scale so that it can safely fulfill its fundamental obligation to continue the supply of electricity. The new company should go beyond the conventional framework of a regional electric utility enjoying a monopoly in a given region of Japan. With an expanded service area, the new company should be made more capable of optimally siting power sources including nuclear power plants, as well as flexibly procuring and distributing power in an emergency. Doing business on a greater scale would help the company to procure funds for investing in power systems at lower cost, thus helping to stabilize electricity prices.
In order to protect the victims and ensure a stable supply of electric power in the long term, it is urgently necessary to reorganize the industry to produce a strong private entity that can safeguard the cost and quantity of energy, rather than pursuing renovation by splitting organizations into smaller units.
The writer is research director of the International Environment and Economy Institute (NPO) in Tokyo.
Business Wire
Order by Time Order by Popularity
15 Comments
Login to comment
-2
tokyotom
yes, a once in a millenuem earthquake would expose all sorts of secrets at any facility
1
sillygirl
no
0
Smorkian
So, this first company generates revenue how, exactly? This proposal sounds exactly like "Let TEPCO do what TEPCO did before the disaster, and let someone else take care of cleanup and recovery, preferably the taxpayers."
0
JapanGal
Sure. Put bars around the nuclear plants and put them inside as a zoo to the unknown irradiated.
0
paulinusa
"So, this first company generates revenue how, exactly? "
Smorkian: It's strictly for accounting purposes, a seperate company created to hold the liabilities and of course ultimately be bailed out by the government. All the while the other company generates electricity and profits ( and survives )
0
SquidBert
I say, take away their license to operate nuclear power plants. Then they can either adapt to the new world and live on or die like the dinosaurs the are.
2
Johannes Weber
This article clearly reveals the crude ways of thought of the nuclear industry. There is only one way to handle the compensation, which can possibly work: it must be done with taxpayer money as no one else could afford such sums. Even more, the other nuclear utilities are not much better. They were lucky that the accident didn't happen on their turf. They should share part of the costs, since they share the responsibility for the sloppy nuclear safety culture of Japan.
But - for justice and future responsibility - this is a sort of state insurance for nuclear power plants. So they should pay a premium. TEPCO estimates the cost as 11 trillions of yen. That's ridiculously little. But even if one sticks with this number that means that the insurance must cover some 10 trillions of yen. A common nuclear plant has a life expectancy of 30-50 years (depending on how naive the regulators are). Let's assume 30 years, because it's easy (they also don't get safer when older). The risk of a severe nuclear accident can be estimated very well from the history of nuclear accidents - one obtains a one severe accident per 6700 years per reactor. Given these figures, it is very simple insurance mathematics to compute the insurance premium. I am not sure how much it would be - but no one would want to operate nuclear power plants under these conditions.
No one would want to enter such an insurance, but it should be mandatory. And the utilities would go on paying for at least as long as they operated the reactors already. Sooner or later, just for the reason of the extreme cost of such an insurance, nuclear phaseout woud begin. No need for any further laws.
1
Smorkian
Which is what I said. TEPCO continues to make money, taxpayers foot the bill. How is this just? Better off nationalizing TEPCO.
0
SquidBert
@Johannes Weber
I am very curious as to where you found the 6700 mtba for nuclear reactors. It's a very interesting number.
Assuming it is correct it gives us: 30/6700 = 0.45 percents risk of an accident during the lifetime (or 0.15% per year) of the reactor.
And with 54 reactors in Japan That gives us: 54*30/6700 = 24.17% (!!) risk that one of the 54 reactors will fail in a period of 30 years
Or if you like: 24.17/30 = 0.8 percents chance of an accident in Japan each year.
I am aware of the oversimplification here, but doing it the right way would produce even scarier numbers as most Japanese reactors are starting to get quite old, and the incident rate of these things tend to go up with age.
0
ExportExpert
If Tepco fails to exist then what ever replaced would still be full of bumbling bungling numbskulls anyway so it makes no difference what the outfit is called whether it be called Tepco or Numbskulls Incorporated its still going to be irresponsible incompetent and lacking common sense and morality.
Atleast we know tepco is crap and can identify it as such.
-1
shinhiyata
Nobody seems to have a problem with Bayer still being around after they brought us Zyklon. Mitsubishi built the Zero and Mercedes Benz were coach builders to the 3rd Reich. Rolls Royce made the Spitfire and General Electric put their reactors on the Scorpion and Thresher. Many companies around today have blood and plutonium on their hands. Heck, Sandoz brought us LSD long before the Beatles were born.
0
fds
tepco's management gambled that a tsunami of that size would not happen (at least on their watch) and lost and should pay up. tepco should be put into bankruptcy to ensure that the money they make is going to pay off their bets and not being used for pay offs. i don't know about now but before this apparently tepco spent more on advertising and promotion than sharp which actually sells something. so how many ads do you see promoting tepco? and where do you think that money goes?
1
Johannes Weber
@SquidBert:
It is an extremely simple and naive calculation from German newspaper, but it should cause us to think about it. You take the approximately 450 nuclear plants in the world, take 30 years as average reactor life-time and divide it by the measured number of capital nuclear accidents in the time span, which gets You 2. Then You get the observed rate of capital nuclear disasters per reactor per year: 450x30/2=450*15~6700 reactoryears per accident.
This thought is incredibly naive and the sample with two accidents is far too small. But still, there is a world of a difference between the 1 million reactoryears that the nuclear industry claims and the things we observe.
And concerning Japan: we have one major disaster with 24% risk. Bull's eye!
0
kchoze
Just nationalize it. Sure, the taxpayers will foot the bill for the compensations, as they will in any case. But at least the operational profits of the company will also go to the government, increasing its revenues and preventing tax increases. Since it's a utility company, there is absolutely no problem with it being government-owned.
Keeping TEPCO private while having the government pay for compensations is the classic "privatization of profits and nationalization of losses". No, either both profits and losses must be private or they both must be public.
Also, use the occasion to strip away TEPCO's rotten corporate culture regarding safety.
0
Christina O'Neill
Tepco will in all probability become bancrupt due to compensation claims and the desruction of the Fukishima reactors without goverment ie tax payers footing a huge amount of funds.If it is at all possible,let Tepco go to the wall. There are alternatives to nuclear power, geo thermal hydro,tidal wind and solar energy.The initial installation cost would be expensive but once installed the maintainance is minimal. There must be an abundant number of private enterprises eager to invest in and build the nessassary infastructure considering the very lucrative profits to be made from thier investments.
Back to top