TEPCO Chairman Tsunehisa Katsumata, second from left, and other officials bow in apology Wednesday for the prolonged crisis at its Fukushima nuclear power plant. (Yoshihiro Yasutomi)As Tokyo Electric Power Co. struggles to end the crisis at the crippled Fukushima No. 1 nuclear power plant, the financial damage continues to pile up for the utility.
Its revenue is expected to nose-dive, fuel prices remain high, and TEPCO stock has plummeted. The company also faces enormous bills for repairs, scrapping at least four reactors, and compensating neighborhood residents and farmers forced to evacuate or dispose of their produce due to radiation concerns.
When asked at a news conference Wednesday if the company can remain in business in its current form, TEPCO Chairman Tsunehisa Katsumata said, "Put simply, we are in a very tough situation."
Despite its regional monopoly status, TEPCO is expected to see a major revenue decline because of rolling blackouts in wide areas and calls for conserving electricity.
Its power supply has run short since the Great East Japan Earthquake and the ensuing tsunami on March 11 knocked out some thermal and nuclear power plants.
At peak times in late July, the total supply will likely fall short of demand by nearly 20 percent. The revenue decline could be smaller than 20 percent, but it still would be "fairly sharp," according to a senior TEPCO official.
To make up for the expected shortfall, TEPCO will have to beef up its thermal power generation, which will add to the costs of facilities investments and fuel purchases.
Crude oil prices are surging due to the turmoil in the Middle East and North Africa, leading to price increases in coal and other fuels.
The prices of liquefied natural gas, now a main fuel, "may rise in the mid- to long-term even though there is currently an ample supply worldwide," said Takayuki Nogami, a senior economist at Japan Oil, Gas and Metals National Corp.
Katsumata said Wednesday that TEPCO will "have no choice" but to decommission four crippled reactors at the plant in Fukushima Prefecture. He said it will still take a fairly long time to stabilize the overheating reactors.
"It's still a long, long way until we can even make cost estimates," Katsumata said.
Scrapping one 1.1 gigawatt-reactor costs 60 billion yen ($720 million) during normal times. Total costs could balloon in Fukushima Prefecture for measures to remove the damaged fuel rods and contain the radioactivity.
The TEPCO chairman also pledged to prepare, "with sincerity," compensation to farmers and residents.
Under the Law on Compensation for Nuclear Damage and contracts with utilities, the government will foot up to 120 billion yen per nuclear power plant in the event of a quake or tsunami.
Beyond that amount, the utility is supposed to take an unlimited responsibility. If the company cannot cover all the bills, the government will be required to extend low-interest loans and subsidies.
With the combined damage at the No. 1 and No. 2 plants in the prefecture, the compensation amount could be trillions of yen, a senior official of the Finance Ministry has said.
TEPCO stock, which was traded around 2,000 yen before the quake struck, closed at 466 yen on Thursday.
TEPCO appears reluctant to give up the remaining two reactors at the No. 1 plant and the four others at the No. 2 plant.
"Their basic functions have been maintained," Katsumata said. "We will decide what to do with them after consulting with the state and neighborhood residents."
Chief Cabinet Secretary Yukio Edano suggested Wednesday the remaining two reactors at the No. 1 plant will have to be scrapped, too.
The four crippled reactors have a combined output of 2.81 gigawatts. The total for the six other reactors is more than double that figure.
Building new plants will be costly and surely face opposition from host communities.
The current crisis has fueled people's distrust of the government and utilities that have repeatedly said that nuclear power generation is safe.
Mayors of host communities for the two plants said TEPCO's decision to scrap the four reactors was not surprising, but they also voiced concerns about lost jobs.
"It can't be helped," said Okuma Mayor Toshitsuna Watanabe, even though "the town and TEPCO have co-existed and co-prospered for the past 40 years."
He said he now thinks the town, where many have worked for TEPCO, "may have been too dependent" on the company.
Naraha Mayor Takashi Kusano said: "The state has pushed its nuclear power policy by repeatedly saying it is safe. It has a grave responsibility."
But Kusano added that he had "no objection to keep the No. 2 plant in operation as long as it is safe."
Tomioka Mayor Katsuya Endo said the other six reactors must not be put back in operation under the current circumstances.
"Unless safety is the top priority, a consensus (of approval) would not be obtained" from not only neighborhood residents but also the entire nation, he said.
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