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Japanese town's approval of nuclear reactor restart reflects subsidy dependence

Tohoku Electric Power Co.'s Onagawa Nuclear Power Plant is pictured in Onagawa, Miyagi Prefecture, on Aug. 21, 2020. (Mainichi)

TOKYO -- Japanese local governments' dependence on "nuclear plant money" distributed by the national government was starkly highlighted recently when one town granted their approval for a reactor restart at one power plant badly damaged in the March 2011 Great East Japan Earthquake and tsunami.

    The town government of Onagawa, Miyagi Prefecture, in northeastern Japan gave Tohoku Electric Power Co. permission to restart the No. 2 reactor at the utility's Onagawa Nuclear Power Plant on Nov. 11.

    Of all the funds swirling around Japan's nuclear industry, the money that has the most influence on local governments hosting power plants flows from a trifecta of legislation collectively called the Three Power Source Development Laws. These subsidies, based on the operational performance of a given nuclear plant, were originally distributed on the pretext that they would be used to enhance local services, including the construction of child care centers, libraries, and other facilities.

    Miyagi Gov. Yoshihiro Murai, middle, Onagawa Mayor Yoshiaki Suda, left, and Hiroshi Kameyama, mayor of Ishinomaki, right, are seen giving consent to the reactivation of the No. 2 reactor at Tohoku Electric Power Co.'s Onagawa Nuclear Power Plant, at a press conference in the northeastern Japan city of Ishinomaki, Miyagi Prefecture, on Nov. 11, 2020. (Mainichi/Daisuke Wada)

    However, the Japanese government has taken measures such as changing both the subsidies' name and their governing mechanisms after the 2011 disaster, so that local governments can still get the money even when the power plant in their jurisdiction has been off-line for long periods. At least some 115 billion yen (around $1.11 billion) has been distributed as subsides and aid from the national government to local hosts of nuclear power plants this fiscal year alone.

    According to the town of Onagawa, it received about 530 million yen (approximately $5.1 million) in subsidies based on the Three Power Source Development Laws in fiscal 2010, the year before the Great East Japan Earthquake. That has increased following the disaster, with subsidies reaching over 1.4 billion yen (roughly $13.5 million) in fiscal 2017 and 2018. This included payments totaling 1.08 billion yen (roughly $10.4 million) connected to two reactors at the plant in service for more than 30 years.

    Onagawa's total fiscal 2019 spending stood at 34 billion yen (roughly $327.4 million). If the fixed property taxes paid for the nuclear power plant (about 2.7 billion yen, or roughly $26 million) are added to the subsidies stemming from the Three Power Source Development Laws, money derived from the nuclear plant accounts for over 10% of the town's annual revenue.

    "We are being greatly helped in terms of finance," a municipal government official commented.

    Of the monies based on the Three Power Source Development Laws, Onagawa reaped about 350 million yen (about $3.37 million) more than previously in one subsidy for enhancing the area around the plants -- a category designed to gain cooperation from communities hosting the plants. In fiscal 2019, the subsidies were put toward the salaries of seven local social welfare council employees (about 28 million yen, or roughly $270,000), updating a hospital's electronic medical record system (about 77 million yen, or some $742,000), and renovating a gymnasium, tennis court and baseball field (about 240 million yen, or roughly $2.31 million), among other purposes.

    Such subsidies can be used for various purposes under the name of enhancing public services. According to municipal project guidelines, although there were many cases where local tax revenue accounted for around 10-20% of expenses, renovation costs for the athletic facilities were covered entirely by the subsidies. Onagawa's situation is hardly unique. Local governments hosting nuclear power plants generally rely heavily on the large subsidies.

    National government policies contribute greatly to the increasing subsidies handed out even as nuclear power stations remain shuttered. The Ministry of Economy, Trade and Industry reviewed regulations following the nuclear disaster such that the plants would be deemed as "in operation" to a certain extent even while their reactors were off-line. Takeo Kikkawa, professor at International University of Japan, suggested that the national government "may have been distributing generous subsidies even when the plants were suspended to make it easier for local governments to approve reactor restarts."

    According to the Onagawa government, reforms that allowed local bodies to receive more funding based on the years a power station has been in service was also one of the factors behind the town's increased subsidy take. Central government figures have raised concerns over this particular change to the subsidy system, including that the economy minsitry is doing it "for its own convenience."

    Furthermore, public relations and research-related subsidies received by Onagawa to cover nuclear power plant tours, information circulars and other costs, among other purposes, recovered to the same level as before the 2011 disaster (around 10 million yen annually, or roughly $96,300) since fiscal 2015. A senior official at a major electric power company commented, "Thorough PR activities are indispensable for getting reactors restarted." It was revealed in the town's project assessment report that a large majority of the contracts to enhance public services and conduct PR-related activities were negotiated without any competition.

    Once the No. 2 unit at the Onagawa nuclear station is back on-line, the town is also set to receive subsidies from the nuclear fuel tax, collected from the power company based on the nuclear plant's performance. The community also reaps further benefits when employees of power companies, including subcontractors, frequent local eateries and other businesses during regular inspections.

    Hideaki Tanaka, a tax law professor at Meiji University, commented, "This nuclear plant money is an extreme example of the government's subsidy and aid regime." And so the town of Onagawa's approval of the restart at their local nuclear plant could be considered inevitable, so dependent on nuclear money have host municipalities become.

    (Japanese original by Yuki Takahashi, Business News Department)

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