Rejected by insurers, Tokyo Electric Power Co. plans to deposit 120 billion yen ($1.56 billion) in compensation reserves with a government body in case further accidents hit the Fukushima No. 1 nuclear power plant.
Rejected by insurers, Tokyo Electric Power Co. plans to deposit 120 billion yen ($1.56 billion) in compensation reserves with a government body in case further accidents hit the Fukushima No. 1 nuclear power plant.
It will be the first time a power company has made such a move against a possible nuclear accident. The crippled Fukushima plant will also be the first in Japan not covered by liability insurance.
TEPCO’s board of directors was expected to approve the plan as early as Jan. 11.
The company will deposit the money with the Tokyo Legal Affairs Bureau this week to cover compensation claims for possible future accidents at the plant.
If the reactors at the plant are decommissioned without further incident, the money will be returned to TEPCO.
The deposit will come from TEPCO’s profit of 186.2 billion yen through sales of KDDI Corp. shares last autumn, which will further dent TEPCO’s bottom line.
The utility initially planned to use the proceeds from the sale to cover the ballooning fuel costs at its thermal power plants while many of its nuclear reactors remain offline.
Power companies usually take out liability insurance worth 120 billion yen per nuclear plant with a private insurance company under the nuclear accident compensation law.
But the Japan Atomic Energy Insurance Pool, an institution jointly formed by 23 nonlife insurers, decided last fall not to renew its insurance contract with TEPCO for the Fukushima No. 1 plant, given the risks involved in dealing with the unprecedented disaster in Japan. The contract expires on Jan. 15.
TEPCO tried to negotiate with a foreign insurance company that is not part of the institution project. But the two sides failed to reach a deal because of differences over the scope of an incident subject to insurance payouts.
The central government in December declared that the situation at the Fukushima plant was under control. But the system being used to cool the damaged reactors is considered makeshift, and decommissioning the reactors could take decades to complete.
This article was written by Tetsuo Kogure and Kazumasa Takenaka.