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Saturday, Oct. 8, 2011
Helping hand for Tepco
A government panel submitted a final report on Tokyo Electric Power Co.'s management and financial situation to Prime Minister Yoshihiko Noda on Oct. 3. Its purpose was to find ways to raise funds from Tepco's assets so that victims of the accidents at the Fukushima No. 1 nuclear power plant could be compensated. It estimated that the amount of redress claims by the end of March 2012 will total ¥4.5 trillion. The government has already set up an entity tasked with securing funds for the redress. Public money will be injected if necessary.
The panel called on Tepco to raise ¥707.4 billion by selling assets and to reduce costs by ¥2.545 trillion over 10 years (roughly twice the amount Tepco originally planned), including cutting the Tepco group's workforce by 7,400, or 14 percent, and reducing pensions for both current and retired workers.
As the panel said, since Tepco gets public financial support, it should carry out additional restructuring efforts, including more cost cuts and asset sales. The Tepco management should take responsibility for the nuclear fiasco in concrete forms, such as resignation, salary cuts and relinquishing of retirement allowances.
The panel called for a change to the current pricing system under which a utility adds a certain amount of profit to the cost of power generation and passes on the total amount to users as electricity bills.
Such a change could help break utilities' regional monopoly. The panel said that in the past 10 years, Tepco overrated the cost by ¥592.6 billion. People should strictly watch Tepco and other utilities' attempt to crush the attempt to change the pricing system.
The panel said if Tepco cannot restart its Kashiwazaki Kariwa nuclear power plant, it will need to borrow ¥4.2 trillion to ¥8.6 trillion. It also said if Tepco does not raise electricity rates, it will not be able to write a business plan for the coming 10 years. It would not be far-fetched to say that the panel has tried to give justification for restarting the nuclear power plant.
The panel also estimated the cost of decommissioning the Nos. 1, 2, 3 and 4 reactors at the Fukushima No. 1 power plant at ¥1.151 trillion. But the cost could be much larger. The panel's estimate can be regarded as a deliberate attempt to make it appear that Tepco's assets exceed its debts.