2 Years On: TEPCO Sees No Turnaround without N-Plant Restart or Rate Hike

Tokyo, March 9 (Jiji Press)--Tokyo Electric Power Co. <9501>, the operator of the disaster-hit Fukushima No.1 nuclear power plant, finds it difficult to achieve its target of returning to profitability during fiscal 2013 without the restart of its Kashiwazaki-Kariwa nuclear plant in Niigata Prefecture, central Japan, or additional price hike. TEPCO already raised its household electricity prices in September last year after receiving one trillion yen in public funds in July, amid deterioration in its financial base due to its huge compensation for victims of the nuclear crisis caused by the tsunami-crippled Fukushima plant two years ago and swelling costs to contain the worst radiation crisis in Japan. In November, the company set up a committee of outside experts to oversee procurement, aiming to cover a revenue loss resulting from a 2 pct cutback in its price hike made after a government assessment. Through a fundamental review of procurement costs, TEPCO aims to reduce costs by more than 4 trillion yen over the next 10 years. In April this year, TEPCO will adopt a new corporate structure with independent company-like divisions specializing in retail, power transmission and distribution, fuel procurement, and thermal power generation. By boosting profitability through those measures, TEPCO aims to get prepared for the scheduled separation of the electricity distribution and transmission business from power producers in 2018-2020. TEPCO President Naomi Hirose, however, says that even after these measures are taken, achieving profitability will be "extremely difficult without restarting nuclear reactors." The power utility was able to scale back the rate hike because its management reconstruction plan assumes that the Kashiwazaki-Kariwa plant's six reactors would be allowed to go back online in fiscal 2013. But if the restart of the reactors is not allowed, the plan should be rewritten, analysts say. Looking toward the restart, TEPCO began construction work in January to have the nuclear plant comply with new safety standards by the Nuclear Regulation Authority. Safety confirmation work for the Kashiwazaki-Kariwa plant by the Niigata prefectural government's technical committee has also been progressing. Given those developments, many power industry people expect the Kashiwazaki-Kariwa reactors will be the first to be resume power generation among same-type rectors in Japan suspended since the triple meltdown at the Fukushima nuclear station triggered by the 9.0-magnitude earthquake and ensuing monster tsunami on March 11, 2011. But winning local support will not be easy. Niigata Governor Hirohiko Izumida has yet to change his cautious stance toward restarting the reactors. TEPCO plans to review the existing reconstruction plan after this summer's House of Councillors election. If it is still uncertain whether or not the reactors will get restarted when the review starts, the company will have no other way than considering another rate hike, some government officials say.