TEPCO Postpones Renewal of Business Plan

Tokyo Electric Power Company (TEPCO), the owner of crippled Fukushima Daiichi Nuclear Power Plant, fails in renewing its own business plan by the end of March. Since it does not have a clear perspective for resumption of Kashiwazaki-Kariwa Nuclear Power Plant, TEPCO is not able to formulate a viable financial plan. The company is submitting a new plan to the government of Japan -- the biggest sponsor for the company -- this summer or later.

The reactors in Fukushima plant exploded when it was soaked in tsunami of East Japan Great Earthquake on March 11, 2011, and lost outer source of electricity necessary for keeping the reactors from overheating. The explosion caused 160 thousand of evacuees and 20 thousand of them are still away from their hometowns. The investigation committee of the Diet determined that the accident was man-made, indicating responsibility of TEPCO.

 

While Kyoto District Court found in 2018 that the government of Japan and TEPCO were responsible for the accident, Osaka High Court denied responsibility of the government in 2022. Although the Supreme Court earlier this month sentenced “not guilty” to two vice-presidents of TEPCO at the time of the accident, the power company is still responsible for compensation for the damage which was brought by the accident.

 

There was an argument that TEPCO should be bankrupted right after the severe accident. Nevertheless, the government of Japan decided to maintain the company with issuance of governmental bond for the company. The company is going to reimburse it for a long period of time. With support from the government, TEPCO has been submitting its management plan for rebuilding the company. It made the first plan in 2012 and renewed it in 2014, 2017 and 2021.

 

TEPCO hoped to renew current plan by the end of March 2025, but the company postponed the deadline. Instead, it submitted a revised version of current plan and Ministry of Economy, Trade and Industry approved it. The revised plan asks the government additional 1.9 trillion yen of support, increasing the issuance of governmental bonds from 13.5 trillion yen to 15.4 trillion yen. Total amount of spendings for the accident of Fukushima plant goes up to 23.4 trillion yen.

 

Although TEPCO plans to pay back 500 billion yen every year, its management has not been improved, because the plan depends on resumption of the Kashiwazaki-Kariwa plant which has been offline since 2012. While TEPCO has been making effort to resume the reactors, they have not cleared the post-Fukushima regulatory standards.

 

TEPCO calculates that resumption of one reactor in Kashiwazaki-Kariwa improves its financial balance by 100 billion yen. On the other hand, the company has to take safety measures against terrorism. While TEPCO had a plan for resumption of three reactors after 2022, its revised plan reduced them to one reactor by the end of FY2025. It is unclear when the company can establish its profitable business.

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