Japan Atomic Power Co. posted record net profits for the first half of the current fiscal year, despite all of its reactors being taken offline following the 2011 Fukushima nuclear disaster.
The company, which supplies five regional electric utilities with power generated at its nuclear power plants, logged 20.9 billion yen ($238 million) in consolidated net profits in the April-September period in 2012, according to its half-year financial report submitted late last year to a regional office of the Finance Ministry.
It was able to post a profit despite generating no electricity because it was paid a combined 76 billion yen in "basic fees" by Tokyo Electric Power Co., which owns the crippled Fukushima No. 1 nuclear plant, Kansai Electric Power Co. and three other utilities.
The unlisted Japan Atomic Power receives these basic fees based on its contracts with the utilities. The company says its contracts are renewed every year and that it receives the payments even if it supplies no electricity to them.
According to the report, the company logged 76.2 billion yen in group sales, a year-on-year drop of 10 percent. Most of those revenues came from basic fees paid by the utilities.
Group net profits shot up because there were no costs from generating power as all three of its reactors were idled.
The company is expected to set a record in the current fiscal year ending in March if it does not suffer any major losses, surpassing its highest full-year group net profits of about 3.2 billion yen in fiscal 2008.
But posting profits without supplying power could rouse public ire because utilities pass these fees on to their customers.
The utilities include basic fees, along with other expenses to generate and transmit electricity, such as fuel and payroll costs, when they calculate electricity rates for general households.
Japan Atomic Power defended its receipt of basic fees, however, saying it is based on its contracts.
"They are paid to finance our expenses to maintain and manage our plants," a public relations official said.
TEPCO, too, justified the payment.
"We have jointly developed Japan Atomic Power's reactors," said an official at TEPCO's publicity department. "We are in a long-term contract with the company to purchase its power and therefore pay basic fees, whether power is generated or not."
TEPCO included the payment of its basic fees in the electricity rates it raised last September.
Kansai Electric also included basic fees in its application for a rate increase, which is now under review by an industry ministry panel of experts.
TEPCO paid the most in basic fees at 27.7 billion yen, followed by Kansai Electric, which paid 16.2 billion yen. Chubu Electric Power Co. paid 14.6 billion yen, Hokuriku Electric Power Co. paid 10.2 billion yen, and Tohoku Electric Power Co. paid 6.8 billion yen.
It is difficult, however, to predict when Japan Atomic Power will be able to resume supplying power to its clients despite its contracts with them.
Following the disaster at the Fukushima No. 1 nuclear plant, all of the nation's remaining 50 reactorws were taken offline for safety checks, and so far, only two reactors at Kansai Electric's Oi plant in Fukui Prefecture have been put back into service.
The Nuclear Regulation Authority, a new industry watchdog set up last year, is set to make a fresh review of each of the reactors after compiling new safety guidelines by summer.
Japan Atomic Power, based in Tokyo, was established in 1957 as a company specializing in nuclear power generation, with most of its investment poured in from the nuclear power industry.
Its single-reactor Tokai plant in Ibaraki Prefecture went into service in 1966 as the nation's first commercial reactor. The reactor is in the process of being mothballed.
Japan Atomic Power faces bleak prospects for the rest of its reactors--two at the Tsuruga plant in Fukui Prefecture and one at the Tokai No. 2 plant in Ibaraki Prefecture, with a combined capacity of 2.62 gigawatts.
The No. 1 reactor at the Tsuruga plant went online in 1970.
It is more than 40 years old, the life span after which a reactor is set to be decommissioned in principle under the law concerning nuclear reactors.
The No. 2 reactor could be instructed to be decommissioned because the NRA concluded that a seismic fault directly below the building housing the reactor is likely active. Under the government's guidelines for quake resistance of nuclear facilities, a reactor is not permitted to be built above an active fault.
The outlook for restarting the Tokai No. 2 plant also appears dismal due to local opposition.
Japan Atomic Power and its group companies have a total work force of 2,294.
Officials with TEPCO and Kansai Electric have served as presidents of the company.
Tsunehisa Katsumata, former president and chairman of TEPCO, serves as an external director of Japan Atomic Power.
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