The Economy, Trade and Industry Ministry is planning to spin off Tokyo Electric Power Co. (TEPCO) Holdings Inc.'s nuclear power generation division and aim for an alliance between the new subsidiary and another power company.
The ministry unveiled the plan at an Oct. 25 meeting of an expert panel on reform of TEPCO and issues related to the tsunami-hit Fukushima No. 1 nuclear plant. The possibility has emerged that realignment of the major utilities' nuclear power divisions will be led by the government as the planned reactivation of idled nuclear reactors has stalled.
As part of TEPCO reforms this past April, the company's thermal power, power retail and power transmission and distribution divisions were transformed into subsidiaries and placed under the umbrella of the newly established TEPCO Holdings.
However, TEPCO Holdings has retained its nuclear power division because the company needs to decommission the crippled Fukushima nuclear complex and pay compensation to victims of the nuclear disaster, which broke out in March 2011.
Under the ministry's plan, a subsidiary would be set up to take over TEPCO's nuclear power business, excluding the Fukushima No. 1 plant, with an eye to forming an alliance between the new firm and another major utility.
The costs of decommissioning the crippled power station's reactors are likely to far surpass the initial estimate. The ministry released a revised projection at the Oct. 25 expert panel meeting stating that the annual decommissioning bill will likely balloon from the current 80 billion yen into the hundreds of billions, due to work to remove melted nuclear fuel from the reactors and other factors.
The panel discussed TEPCO reforms to raise funds to cover the massive expense of dealing with the accident, such as compensation payments and decontamination of areas tainted with radioactive substances emanating from the nuclear disaster, plus decommissioning.
The committee is aiming to increase TEPCO's profitability by promoting the realignment of the firm's nuclear power division and other cost-cutting efforts.
TEPCO set up a joint venture, JERA Co., with Chubu Electric Power Co. in April 2015 to gradually integrate their thermal power station fuel procurement and overseas power generation divisions. TEPCO has also formed a business tie-up with SoftBank Group Corp. to bundle electricity and communications device contracts.
The industry ministry furthermore proposed that TEPCO's power transmission and distribution subsidiary, which is highly profitable thanks to a large number of customers in the Tokyo metropolitan area, strengthen its alliances with other utilities.
The expert committee is poised to work out the details of a plan to spin off TEPCO's nuclear power division and how the subsidiary should join hands with other companies. The panel will draw up a draft of its proposals possibly by the end of this year, and incorporate the recommendations in TEPCO's corporate rehabilitation plan to be released next year.