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Thursday, May 19, 2011
Tepco compensation plan
The government on May 13 decided on the overall framework of a scheme to help Tokyo Electric Power Co. compensate people who have suffered losses from the accidents at its Fukushima No. 1 nuclear power plant.
Compensation will be paid to those who were evacuated from their homes as well as to farmers, fishermen and others who have suffered financial losses due to the accidents.
The government plans to submit related bills to the Diet in an extraordinary session to be convened as late as in August. In the meantime, Tepco should strive to make tentative payments to evacuees, farmers and fishermen as soon as it can to alleviate their current suffering from the loss of income.
Tepco must not abuse the scheme, which envisages use of public money to help it pay an enormous sum in compensation — estimated at several trillion yen. The company should make all-out efforts to minimize the use of public money.
Under the framework for the scheme, the government will allot zero-interest-rate bonds to a new institution to be set up to facilitate Tepco's compensation payments.
Tepco and other power companies will provide funds to the institution, which will inject capital into Tepco, guarantee Tepco's debts and buy its debentures.
No ceiling will be imposed on the total amount of Tepco's compensation payments. When Tepco runs short of funds, the institution will cash the government bonds and provide the cash to Tepco, which will have to pay back the money later. The new institution will also serve as an insurer against future nuclear-related accidents.
There is the possibility that Tepco and other utilities will raise electricity-use rates in an attempt to secure funds for the planned institution. Tepco will also be tempted to raise the bills to its customers because of the anticipated higher costs of relying more on thermal power generation to make up for power shortages caused by the Fukushima nuclear accidents.
The scheme has the potential to help Tepco at the expense of electricity users. The government should find and use hidden funds in the nuclear power establishment so that the burden on electricity users will be minimized.