Tokyo Electric Power Co., operator of the crippled Fukushima No. 1 nuclear power plant, will suffer a fund shortage in 10 years even if it raises electricity rates by about 10 percent, according to estimates by a government panel.
Tokyo Electric Power Co., operator of the crippled Fukushima No. 1 nuclear power plant, will suffer a fund shortage in 10 years even if it raises electricity rates by about 10 percent, according to estimates by a government panel.
The government's investigation committee on TEPCO's management and finance also estimates that TEPCO's debts will exceed its assets if all reactors at its Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture are shut down until 2013.
The committee, which is examining TEPCO's assets for compensation over the accident at the Fukushima No. 1 plant, will include these estimates in its report to be submitted to Prime Minister Yoshihiko Noda in early October.
TEPCO is considering raising electricity rates by about 15 percent.
The panel's members are opposed to TEPCO increasing rates without making sufficient cost-cutting efforts, but they are not authorized to reject a fee hike.
The Nuclear Damage Compensation Facilitation Corp., which will compile TEPCO's special business plan for the next 10 years with the utility, will consider whether to approve a rate increase.
The investigation committee estimated TEPCO's financial conditions based on three scenarios: all reactors at the Kashiwazaki-Kariwa nuclear power plant will resume operations by 2013; restarts of some reactors will be delayed; and all reactors remain shut down.
In all cases, TEPCO will run short of cash reserves because cumulative expenditures will exceed revenues in 10 years even if it raises electricity rates by about 10 percent.
TEPCO is expected to suffer a negative net worth if all reactors at the Kashiwazaki-Kariwa nuclear power plant remain shut down until 2013 due to increased fuel costs for thermal power plants to make up for the lost capacity at Kashiwazaki-Kariwa.
The committee estimates that TEPCO will be able to secure about 600 billion yen ($7.85 billion) through restructuring measures, such as sales of assets including real estate and subsidiaries.
TEPCO has previously told the panel that it will be able to secure more than 600 billion yen.
In its report, the committee is expected to emphasize the importance of securing the massive funds required for decommissioning reactors at the Fukushima No. 1 plant because TEPCO cannot bear those costs alone.
The panel plans to point out problems with the traditional system to determine electricity rates, which has been criticized as too generous to electric power companies.
The report is not expected to refer to the need to separate the business side of electricity transmission from the operation of electricity generation.