Cash-strapped Japanese power utilities, which reported Y1.3 trillion ($13.3 billion) in annual pretax losses in the past week, will now likely face the extra burden of shutting down aging nuclear power plants that don't meet new regulations from the country's revamped nuclear industry regulator.
Cash-strapped Japanese power utilities, which reported Y1.3 trillion
($13.3 billion) in annual pretax losses in the past week, will now likely face
the extra burden of shutting down aging nuclear power plants that don't meet
new regulations from the country's revamped nuclear industry regulator.
In a detailed draft of reactor safety regulations presented in April, the
Nuclear Regulation Authority requires all reactors to adopt the latest safety
measures. This means reactors with designs dating back to 1975 or earlier will
need costly overhauls before restarting.
"We are not going to be lenient on old reactors," NRA Chairman
Shunichi Tanaka said at a news conferences in April.
"It's the decision of the utilities," Mr. Tanaka added, but: "I
imagine it wouldn't be easy cost-wise" to make them safe enough to restart.
The three reactors that suffered the most severe damage in the 2011 Fukushima
Daiichi accident all had designs that dated back to before 1975. Nationwide,
the requirement is expected to mean at least 10 of 50 licensed reactors will
have to shut down.
The hardest-hit would be Kansai Electric Power Co. (9503.TO) in western
Japan
, with
seven of its 11 reactors' using pre-1975 designs. The utility previously
generated more than half of its electricity from nuclear power, and currently
operates the country's only two units that have been restarted since the
Fukushima
accident.
Like other utilities, Kansai Electric Power has had to make up for idle nuclear
capacity by burning expensive fossil fuels. As a result, it posted a record
Y243 billion net loss for the fiscal year ended March, following a Y242 billion
net loss the previous year.
Without further restarts the red ink is expected to keep flowing, potentially
threatening the company's ability to tap banks for new loans.
The costs of permanently shutting down the facilities would add to these
operating losses. Utilities haven't provided any cost figures, but the 2008
decision by Chubu Electric Power Co. (9502.TO) in central
Japan
to
shut down two units at the Hamaoka nuclear power plant due to safety upgrade
costs gives some idea.
Based on their financial results, the cost of shuttering the two units came to
around Y194 billion. But even those figures exclude the potentially massive
long-term costs of tending spent nuclear fuel, which must be looked after for
centuries.
Asked in a late April about possible decommissioning, Kansai Electric President
Makoto Yagi said only: "We are hoping to find ways to keep them in
use," while not ruling out decommissioning.
Other than Kansai Electric, at least three more reactors have designs approved
by the government in or before 1975. All are in western
Japan
.
The new regulations will take effect July 18 with any review taking at least
six months, according to the agency.
For the utilities, time is pressing. In the two years after the
Fukushima
accident,
Japan
's
annual imports of liquefied natural gas rose 23% to 86.9 million metric tons.
The government is also clearly worried about the costs of the fuel and the
impact on the trade balance, which now shows monthly deficits--largely unknown
before the
Fukushima
accident. The merchandise-trade balance logged a deficit of Y362.4 billion in
March, extending the run of deficits to nine months.
At the same time, the government doesn't want to appear to undermine the NRA,
which was created after the previous agency was disbanded over complaints it
was too close to the industry.
Minister of Economy, Trade and Industry Toshimitsu Motegi said last week he
expects some reactors to go back online in autumn. But he quickly downplayed
his own comments later in the week, saying only: "The NRA makes its
decisions independently."
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