Four electric power companies will effectively be forced to close up shop if the government decides to decommission the nation's nuclear reactors in fiscal 2012.
Four electric power companies will effectively be forced to close up shop if the government decides to decommission the nation's nuclear reactors in fiscal 2012.
That is because their debts will exceed total assets.
The estimates were produced by the industry ministry at the request of a lawmaker of the ruling Democratic Party of Japan.
The four companies are Tokyo Electric Power Co.; Tohoku Electric Power Co.; Hokkaido Electric Power Co.; and Japan Atomic Power Co., which sells power generated with nuclear reactors to electric utilities.
Companies with a negative net worth will not be able to keep operating because banks will be reluctant to lend to them.
In the case of TEPCO, operator of the crippled Fukushima No. 1 nuclear power plant which owns 13 reactors, its debts will exceed assets by 620 billion yen ($7.8 billion), according to the estimates.
On the company's books, nuclear plant buildings and nuclear fuel are listed as assets, valued at 750 billion yen.
But they will become worthless and must be listed as losses once a decision is made to decommission reactors.
In addition, expenses for decommissioning will fall 400 billion yen short. Losses will total 1.15 trillion yen, compared with the company’s net assets of 530 billion yen.
Similarly, Tohoku Electric, with four reactors, will have a negative net worth of 20 billion yen.
At Hokkaido Electric, with three reactors, the figure comes to 100 billion yen; and at Japan Atomic Power, with three reactors, 90 billion yen.
For all 10 electric power companies, assets valued at 3.2 trillion yen will become worthless if a decision is made to decommission all 50 reactors in the current fiscal year. Expenses for decommissioning will fall short by 1.2 trillion yen.
Losses will total 4.4 trillion yen, accounting for more than 70 percent of their combined net assets of 5.9 trillion yen.
The government is pushing to restart nuclear reactors, citing the risk of power shortages this summer.
However, officials fear that many electric power companies will be thrown into staggering financial difficulties if reactors are not restarted and decommissioned.
The industry ministry has argued that restarts are necessary, saying fuel costs for thermal power generation will increase by 3 trillion yen a year. But the estimates show that decommissioning will have a more critical impact on the management of electric utilities.
According to the estimates, even companies that will not have a negative net worth will lose a good portion of their net assets if reactors are to be decommissioned.
Chubu Electric Power Co. and Chugoku Electric Power Co. will lose 30 percent of their net assets although they do not rely to any great extent on nuclear power generation.
Kansai Electric Power Co. will lose 50 percent of its net assets although its aging nuclear reactors have already lost much of their asset values.
At all 10 companies, actual losses are expected to be much larger than the estimates because the huge costs for storing spent nuclear fuel and reprocessing it are not included.