TEPCO, Tohoku Electric to give Japan Atomic financial boost to help restart reactor
Tokyo Electric Power Company Holdings Inc. (TEPCO) and Tohoku Electric Power Co. have decided to help Japan Atomic Power Co. cover the some 174 billion yen needed to finance preparations to restart its Tokai No. 2 nuclear power station.
The hefty sum is the estimated cost of safety upgrades required by the Nuclear Regulation Authority (NRA) to restart the plant in the village of Tokai, Ibaraki Prefecture. The NRA, which carries out mandatory plant inspections ahead of any reactor restart, has requested Japan Atomic to submit a plan to secure the necessary funds for the safety measures.
However, Japan Atomic's sole business is nuclear power generation, and both its two reactors are currently stopped. The company has only survived this far thanks to the basic annual fee of about 100 billion yen included in its power supply contracts with Japan's five big electric utilities. Under these conditions, it looked extremely difficult for Japan Atomic to cover the Tokai No. 2 station upgrade costs on its own, and the firm appealed to TEPCO and Tohoku Electric -- both of which have power purchase contracts for electricity from the plant -- for support.
TEPCO and Tohoku Electric are set to decide on March 30 to accept Japan Atomic's plea for financial help and open discussions, and notify the power producer. Japan Atomic will in turn present the outside aid to an upcoming NRA inspection committee meeting.
Regarding the aid, TEPCO and Tohoku Electric will consider guaranteeing loans to Japan Atomic from its creditors. However, the utilities plan to make that decision once they have evaluated progress on the inspections needed for the Tokai No. 2 plant to be restarted, and examined the formal construction cost estimates for the necessary safety upgrades.
The announcement of TEPCO and Tohoku Electric's financial backing for Japan Atomic will bolster the case for the Tokai No. 2 station's return to operation. However, the restart faces hurdles, including obtaining local resident approval and the need for the surrounding local governments to draw up evacuation plans in case of a serious accident at the plant. Thus, even if the power station does pass the NRA inspections, there is no guarantee it can be restarted.
Furthermore, TEPCO is also liable for tremendous costs associated with dealing with the Fukushima No. 1 nuclear plant disaster, and the company could face criticism for offering financial aid to Japan Atomic under these conditions.