New power firms likely to share decommissioning costs for aging nuke reactors

The Ministry of Economy, Trade and Industry is set to have new smaller electric power companies shoulder part of the costs of decommissioning nuclear reactors that major utilities decided to scrap for reasons other than nuclear disasters, it has been learned.

The new power suppliers will be required to share the costs of decommission work for nuclear reactors that major utilities voluntarily decided to scrap after the Nuclear Regulation Authority introduced new safety standards following the 2011 Fukushima nuclear crisis.

Currently, this covers six reactors -- the No. 1 and 2 reactors at Mihama Nuclear Power Plant in Fukui Prefecture operated by Kansai Electric Power Co., the No. 1 reactor at Japan Atomic Power Co.'s Tsuruga nuclear station also in Fukui Prefecture, the No. 1 reactor at Kyushu Electric Power Co.'s Genkai nuclear plant in Saga Prefecture, the No. 1 reactor at Shimane nuclear station operated by Chugoku Electric Power Co. in the Shimane Prefecture capital of Matsue and the No. 1 reactor at Shikoku Electric Power Co.'s Ikata nuclear power plant in Ehime Prefecture. It is expected, however, that the number of reactors that utilities will scrap is going to increase due to aging reactors across Japan.

The current system in which utilities are required to save up money necessary for reactor decommission projects, collected from electricity bills, will be maintained for reactors that are under operation or under work to be restarted. When utilities decide to scrap such reactors due to aging, however, new power companies will be required to pitch in for the decommission work.

Major utilities currently include a surcharge in electricity fees to cover the costs of decommissioning nuclear reactors, but the economy ministry is concerned that when deregulation of the electricity market is completed by around 2020, the shortfalls for decommissioning costs may not be covered in the current system. The ministry concluded that to make sure that the fees are collected, it needed new power companies to share the burden from 2020.

The ministry plans to have new power suppliers cover the shortfalls of the decommissioning costs as well as pay for depreciation -- money spent on the construction of nuclear plants and capital investment that is allocated later in the assets' useful life -- by adding extra costs on top of fees they pay to major utilities to use their power grids. It is likely that the extra costs the new power companies will pay will be added to electricity bills for those who use power supplied by the new utilities.

The economy ministry had initially considered having new companies share the costs of the decommission work for nuclear reactors whether they are being scrapped or under the process of being restarted, but decided to give up the initial plan after being met with a public backlash.