The government has formally approved a restructuring plan for Tokyo Electric Power Co., operator of the stricken Fukushima No. 1 nuclear power plant, which will be soon under temporary state control.
It has also been decided that Naomi Hirose, a managing director at the utility, will be promoted to president.
The new management team led by Hirose and Kazuhiko Shimokobe, who is to become chairman, will assume their posts after the company’s annual shareholders meeting in June. Shimokobe is a lawyer and key member of a publicly financed fund to help TEPCO pay compensation to victims of the Fukushima nuclear disaster.
But the strategy drawn up to rehabilitate TEPCO, dubbed the comprehensive special business plan and approved on May 9, is riddled with problems.
It envisions bringing the company back into the black by the end of fiscal 2013. But doubts have already been raised over whether the target is achievable because it is based on the assumption that TEPCO can raise rates and restart the idled reactors at its Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture.
In addition, the plan calls on the government to consider a framework for fresh financial aid to help TEPCO pay the huge costs of decommissioning reactors at the Fukushima No. 1 plant and decontaminating areas polluted by radiation.
The proposal was included after the government concluded TEPCO on its own would face tremendous difficulty raising the trillions of yen needed to scrap the reactors and clean up polluted areas in addition to the enormous outlays in compensation to victims.
It is as if TEPCO has thrown in the towel before it starts the fight to deliver on its promise to rehabilitate the company.
We also believe TEPCO will be unable to deal with the consequences of the disaster without assistance.
Given that promoting nuclear power generation has been national policy for a long time, the government must also be held partly responsible for the disaster. As such, we believe it must provide public funds to sort out the mess.
But this can only happen after the bankruptcy process is duly applied to TEPCO and the company’s shareholders and creditors are made to pay the price for their own mistakes.
The government cannot hope to win public support for providing additional taxpayer money to the utility without taking such steps.
It is already clear that the turnaround plan will not work. The Noda administration should act swiftly and develop a new framework for coping with TEPCO's problems.
There are many things TEPCO itself should do under the government’s supervision. In particular, it urgently needs to establish a system for stable power supply.
Four of the reactors at the Fukushima No. 1 plant are now set to be decommissioned. It is also effectively impossible to restart the remaining two reactors at the plant. There is no prospect, either, for bringing the Fukushima No. 2 nuclear power plant back on stream any time soon in the face of strong opposition by the Fukushima prefectural government.
Currently, TEPCO is managing to meet demand for power by operating aged thermal power plants that had been mothballed and mobilizing all the emergency power sources available.
But there is a pressing need for a new full-fledged power plant to compensate for the loss of nuclear power generation.
TEPCO, however, cannot afford to build a new facility. So the business plan proposes that TEPCO’s thermal power operations be spun off into a separate unit to make it easier for the utility to develop and operate power plants jointly with new electricity suppliers.
Given expected future deregulation of the power market, it would be better if companies in various industries, in addition to the existing big electric utilities, get involved in the power generation business.
But it is also clear that using TEPCO’s assets, including land for building power plants, would make it easier to secure necessary power generation capacity to meet immediate demand.
It is imperative for TEPCO to build new low-cost, high-efficiency power plants as soon as possible. To fulfill its responsibility to ensure stable power supply to its customers, the utility should abandon its traditional policy of building facilities on its own and find business partners by using a bidding system, if necessary.
These changes at TEPCO should pave the way for future liberalization of the power market to allow consumers to choose their electricity suppliers.
--The Asahi Shimbun, May 10
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