Eight electric power companies reported a combined loss of 1.59 trillion yen ($16 billion) for fiscal 2012 as the aftereffects of the Fukushima nuclear disaster continued to hammer their bottom lines.
Eight electric power companies reported a combined loss of 1.59 trillion yen ($16 billion) for fiscal 2012 as the aftereffects of the Fukushima nuclear disaster continued to hammer their bottom lines.
With almost all of their nuclear reactors shut down, the companies’ fuel costs soared for thermal power generation to secure a stable supply of electricity. They also had to spend large sums for maintenance of the idle reactors as well as for new measures to protect the nuclear plants against earthquakes and tsunami.
Four of the eight utilities posted record losses.
The electric power industry, which has been highly dependent on nuclear power, is banking on the Abe administration to approve the restarts of the reactors. However, new safety regulations could further delay such decisions, force the decommissioning of certain reactors or make nuclear power plant operations economically unfeasible.
Some power companies are raising electricity rates to get through this period of uncertainty.
By April 30, the nation's 10 regional electric power companies released their financial results for the business year that ended in March.
Only Okinawa Electric Power Co., which operates no nuclear plants, and Hokuriku Electric Power Co., which runs one nuclear plant but relies mainly on thermal and hydro power generation, posted profits for fiscal 2012.
Tokyo Electric Power Co., operator of the crippled Fukushima No. 1 nuclear plant, reported the biggest loss of 685.2 billion yen.
It was the beleaguered company’s third consecutive annual loss, and it was compounded by 1.16 trillion yen in compensation paid to victims of the nuclear disaster, which started in March 2011 following the Great East Japan Earthquake and tsunami.
“The difficult-to-return zone has been clearly defined, so we have raised the total amount of compensation,” TEPCO President Naomi Hirose said. Evacuees will not be allowed to return to their homes in that zone near the stricken plant until at least March 2017.
Under its rehabilitation plan, TEPCO and its largest shareholder, the central government, plan to return the utility to the black for the year ending in March 2014. Creditor banks have also extended loans on the condition that TEPCO posts a profit for the current fiscal year.
But the rehabilitation plan is based on the assumption that TEPCO will be able to restart seven idle reactors at its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture beginning in April.
It is unclear when those reactors will actually be able to go online.
The eight electric power companies said their fuel costs for thermal power generation totaled about 7 trillion yen.
Such outlays have been a particularly huge drain on the four companies that reported record losses: Hokkaido Electric Power Co. (132.8 billion yen); Kansai Electric Power Co. (243.4 billion yen); Shikoku Electric Power Co. (42.8 billion yen); and Kyushu Electric Power Co. (332.4 billion yen).
They had depended on nuclear power for around 40 percent of their electricity supply.
Only two of the nation’s 50 nuclear reactors are operating—at Kansai Electric’s Oi plant in Fukui Prefecture.
While the 48 idle reactors are not generating profits for the utilities, expenses are piling up. The nine companies that operate nuclear plants said they spent 1.2 trillion yen in maintenance for the reactors in fiscal 2012.
Additional expenses are expected.
Under planned government-mandated safety standards, the Nuclear Regulation Authority will instruct operators to take countermeasures against natural disasters, such as building levees to block tsunami and constructing buildings for emergency power systems that can withstand powerful earthquakes.
The nine nuclear plant operators have estimated near-term costs for such safety measures at 1.2 trillion yen.
In addition, 10 of Japan’s 50 nuclear reactors started operations more than 35 years ago, raising questions about the wisdom of continuing to run such aging equipment.
Some reactors are believed to be sitting directly above active faults. If these geological features are confirmed, utilities will be forced to decommission those reactors.
Electric power companies must now decide whether to maintain their nuclear plants at potentially huge and continuing costs or take a temporary yet substantial loss by decommissioning the reactors.
The utilities plan to make up for some of their losses by charging more for electricity.
TEPCO increased its household electricity rates in September. Kansai Electric and Kyushu Electric followed suit from May.
Hokkaido Electric, Tohoku Electric and Shikoku Electric have applied to the government for permission to raise their electricity rates.
(This article was written by Takashi Ebuchi, Mari Fujisaki and Yuriko Suzuki.)