04/04 Gov't mulls separating TEPCO's power production, transmission units

Gov't mulls separating TEPCO's power production, transmission units

The headquarters building of the Tokyo Electric Power Co., also known as TEPCO, at the base of the communications tower in the middle, is seen in Tokyo Monday, March 28, 2011. (AP Photo/Greg Baker)

The government is looking into the possibility of dividing Tokyo Electric Power Co. (TEPCO), at the center of the Fukushima nuclear power plant disaster, into power generation and transmission units as it considers injecting capital into the embattled utility giant, it was learned April 4.

Under the scenario, the projected transmission unit will be merged with another major electric power firm as TEPCO faces potentially huge damages claims from residents and other parties in connection with radiation leaks from its nuclear power plant, which was seriously damaged by the March 11 earthquake and tsunami.

The government of Prime Minister Naoto Kan is considering temporarily bringing TEPCO under state control to deal with such claims and ensure a stable supply of electricity. But a government source said, "We cannot gain the Japanese people's understanding by rescuing TEPCO, which has caused such a serious accident, simply through the use of public funds."

If TEPCO's separation and consolidation with another utility become a reality, the nation may witness a historic restructuring of its power industry. Currently, 10 big power companies enjoy a virtual monopoly from power generation to power transmission in various regions.

Tokyo Electric Power Co., (TEPCO) Chairman Tsunehisa Katsumata, right, speaks during a news conference at the company's head office in Tokyo, Wednesday, March 30, 2011. (AP Photo/Itsuo Inouye)

Of the 10 major utilities, TEPCO towers over the nine others and its sales of about 5 trillion yen are nearly double that of its closest rival Kansai Electric Power Co. As of the end of last year, TEPCO had interest-bearing debts of about 7.5 trillion yen.

TEPCO's financial woes are likely to get worse as the utility is confronted with the daunting task of dealing with the crippled nuclear power plant and damages claims.

The government hopes to limit the term of TEPCO's nationalization to a minimum, and there may be strong public resistance to its plan to salvage the utility through an injection of public funds. "It will be difficult to allow TEPCO to operate under its present name (after the end of TEPCO's temporary nationalization)," said a source working under Kan at the Prime Minister's Office.

Some people think that TEPCO is too massive to merge as a whole with another electric power company. Accordingly, there are several proposals under study, including separating TEPCO's electricity generation and transmission units and merging its transmission segment with Tohoku Electric Power Co. to create an "East Japan Electric Power" firm. Another is to combine the unit with Kansai Electric to unify the different frequencies to help ensure a long-term stable supply of electricity.

The government's plan for TEPCO's power generation unit is aimed at turning it into a power wholesaler which will sell electricity to power-transmission firms.

In this photo taken on Thursday, March 31, 2011 by Japan Maritime Self-Defense Force and released by Japan Defense Ministry Friday, April 1, JMSDF personnel all in protective suits are aboard a tugboat towing a U.S. military barge carrying pure water towards the quay of the tsunami-stricken Fukushima Dai-ichi nuclear complex in Okumamachi, Fukushima Prefecture, northeastern Japan. (AP Photo/Japan Defense Ministry)

Also under consideration is a plan to nationalize TEPCO's nuclear power division, which is expected to require huge amounts of money to decommission the crippled nuclear power plant and treat radioactive materials.

Click here for the original Japanese story

(Mainichi Japan) April 4, 2011

東日本大震災：福島第１原発事故　東電、発電・送電分離案　大手と統合検討－－政府

　福島第１原発で深刻な事故を起こした東京電力への公的支援に関連し、政府内で東電を発電部門と送電部門に分離し、送電部門を他の大手電力会社などに統合する処理案が浮上していることが４日、明らかになった。東電は福島原発事故の放射性物質の漏えいで巨額の損害賠償が見込まれる。

　政府は原発周辺の避難住民らへの賠償に万全を期すとともに、電力供給の安定を図るため、東電に出資して管理下に置く方針。しかし「深刻な事故を起こした東電を公的資金で救済するだけでは、国民の理解が得られない」（政府筋）と見ており、分離処理案が浮上した。

　東電の分離と他の電力会社への統合が実現すれば、電力大手１０社が地域ごとに発電から送電まで電力事業を事実上独占する戦後の電力体制の再編につながる可能性がある。

　１０社の中でも、東電は売上高が関西電力の約２倍の約５兆円と断トツの存在で、昨年末時点で約７兆５０００億円の有利子負債を抱える。福島原発の処理や数兆円にのぼると見込まれる損害賠償負担で経営が悪化するのは確実で、政府は東電破綻を防ぐため、出資して一時的に公的管理下に置く方針を固めている。

　ただ、公的管理の長期化は避けたい考えで、最終処理策の検討も進めている。政府が公的資金で救済することには国民の反発も予想され、政府は「（公的管理脱却後の最終処理では）東電の看板のまま存続させるのは難しい」（官邸筋）との見方に傾いている。

　また、丸ごと他の電力会社に統合するには規模が大き過ぎるとの指摘もある。このため、政府内では発電部門と送電部門を分離する「発送電分離」に踏み切り、送電部門を東北電力と合併させて「東日本電力」とする案や、ナンバー２の関西電力と統合させて、東西で異なる電力の周波数の統一を進め、長期的な電力の安定供給体制の構築につなげる案などが議論されている。【三沢耕平】

＝＝＝＝＝＝＝＝＝＝＝＝＝＝

　■ことば

　◇発送電分離
　東電など電力会社が一貫して行う電力事業を「発電」と「送電」などの機能別に分離し、それぞれ別の事業者に行わせること。発電会社は送電会社に送電線網の使用料を払い、家庭や企業に電力を供給する。実現すれば、鉄鋼会社など発電事業への新規参入組も公平な条件で送電線網が使えるようになり、電力市場の競争が活発化。電気料金の値下げや太陽光発電など再生可能エネルギーの普及促進につながると指摘される。

英訳

福島第１原発：堤防にも損傷　２号機の汚染水流出か
福島第１原発：自主避難、消えた村　３０キロ圏内の葛尾
福島原発：「天災ではない」佐藤栄佐久・前知事
汚染水着色し追跡　２号機立て坑亀裂
福島原発：廃炉求める緊急要請書　地元団体など

02/04 Disaster legislation 'to nationalize land'

The Yomiuri Shimbun

A key part of a special legislative package for disaster reconstruction will place land that was wrecked by the March 11 tsunami and has been abandoned by disaster victims under state ownership, it has been learned.

The government and Democratic Party of Japan are working on a set of bills to help with the rebuilding of regions struck by the disaster and hope to pass the package by the end of the month, government sources said Thursday.

Many tsunami-devastated coastal communities have been largely depopulated and are unlikely to be revived because of the severity of the disaster, the sources said. In addition to the areas laid waste by the tsunami, the ongoing crisis at the Fukushima No. 1 nuclear power plant could leave large tracts of land abandoned for a long period of time.

To address the scale of the tragedy, the special legislation will increase the burden the central government must pay to move disaster victims into evacuation shelters. Under the existing disaster relief law, the central government is required to fund three-fourths of the cost, according to the sources. The bigger ratio will ease the burden on local governments, which must pay for a quarter of the costs under the current system.

The legislation will also allow the central government to quickly purchase land made vacant by tsunami. Nationalizing land would facilitate the rebirth of tsunami-hit communities by coordinating reconstruction efforts, the sources said.

The legislative package will also abolish a system that reduces the gasoline tax by about 25 yen per liter when the national average price of regular gas tops 160 yen per liter for three months straight, the sources said. The tax-cut system could reduce government revenue by hundreds of billions of yen per year.

For farmers who have suffered losses due to the Fukushima nuclear crisis, the planned special legislation will provide speedy lump-sum payments before exact compensation amounts are calculated according to the Compensation for Nuclear Damages Law, they said. The legislative package will also enable bans on shipments of radiation-affected crops to be lifted speedily and flexibly when the levels are deemed no threat to human health.

And to help disaster victims rebuild their lives, tax breaks or cuts will be given for home construction and vehicle purchases, the sources said.

Finally, the package will establish a "restoration promotion headquarters" that includes the entire Cabinet as well as a "restoration agency," they said.

(Apr. 2, 2011)

30/03 Japan mulls Tokyo Electric nationalization; shares tank.

REUTERS

2011/03/30

.Japan may nationalize Asia's largest utility, Tokyo Electric Power , as it struggles with the financial costs of the country's worst nuclear disaster, a move that would please bondholders but hurt shareholders who would likely lose out.

Imposing state management is one option that Japan is mulling, National Strategy Minister Koichiro Gemba said on Tuesday, as the costs of compensating businesses and households affected by leaking radiation and the expense of repairing crippled nuclear reactors looked set to soar.

At the same time, the utility's ability to pay has been hobbled by a fall in generation capacity that is causing rolling blackouts that are expected to last for weeks if not months.

By gaining a de-facto government guarantee on its 7.5 trillion yen ($6.1 billion) in debt bondholders would feel more confident that Tokyo Electric, known as TEPCO, can repay its loans, analysts said.

"If the government nationalizes TEPCO, I don't see any significant immediate impact on lenders and bond holders. Rather, I think the event could be positive for TEPCO's credit status," said Tetsuya Yamamoto, a senior analyst at Moody's Investors in Japan.

Tokyo Electric's future has been tenuous since the March 11 earthquake and tsunami struck its Fukushima Daiichi nuclear complex, causing it to leak radiation. Its shares have fallen 70 percent and the cost of insuring its debt against default has risen 10-fold.

"Naturally it is possible that there will be various debates about the state of Tokyo Electric," Gemba was quoted by Kyodo news agency as saying when asked about the possibility of nationalization.

The Yomiuri reported earlier had that some members of the government had proposed a plan for the state to take a majority stake in Tokyo Electric and help it pay for damages stemming from the nuclear accident.

One government source told Reuters one plan being floated was to spin-off TEPCO's nuclear business into a separate company and nationalize that.

"The possibility is small that TEPCO continues on in its current state," said the source, who was not authorized to speak publicly on the matter.

The company has been roundly criticized for its prepardness and handling of the disaster, with experts questioning its response and Prime Minister Naoto Kan reportedly demanding "What the hell is going on?" as the radiation crisis unfolded.

Even before compensation claims are filed, the crippled former state-owned utility faces higher costs.

Nomura Holdings analyst Shigeki Matsumoto said this month that TEPCO will have pay more than $1 billion every month on alternative fuels to make up for lost capacity. With reactors likely to be off line for a long time, that expense will mount.

TEPCO took almost two years to restart reactors at its Kashiwaki-Kariwa plant after an earthquake there halted generation in 2007 although the damage was far less severe that at Fukushima, Matsumoto said.

With the Fukushima plant still spewing radiation the eventual bill could easily outstrip TEPCO financial resources. The crisis appeared to escalate in the past few days with plutonium found in soil on Tuesday, rattling already shaky financial markets.

Ballooning costs could quickly eat through emergency financing from Japan's big banks, which are in talks to provide some $25 billion in loansStill, any political decision to bring TEPCO under state control may take some time. Chief Cabinet Secretary Yukio Edano had said earlier on Tuesday that the government was not currently considering nationalizing the utility.

"At this point, it is my understanding that government institutions are not considering such a move. The government will be directing TEPCO to do this everything possible, to resolve this situation and those who are affected," he said.

Tokyo Electric spokesman Hajime Motojuku said he was unaware of any plan for nationalization: "Our first and biggest priority at this moment is to prevent the nuclear power plant accident from worsening further," he said.

The proposal, however is already eroding shareholder value.

"Although details cannot be seen such as how exactly the government is going to nationalize the company, as long as there are concerns that TEPCO may be nationalized, investors don't want to hold the stock. Passive funds are selling too," said Hajime Nakajima, a trader at Cosmo Securities in Tokyo.

Tokyo Electric shares were untraded due to a glut of sell orders at 566 yen, down 19 percent from Monday's close. The company has lost about $30 billion in market value since the March 11 disaster.

The spread on Tokyo Electric's 5-year credit default swaps widened to a record high of 475 basis points on Monday on Markit, against just 40 points before the crisis.

The utility, which provides power to about one-third of the Japanese population, had 432 billion yen in cash and equivalents at the end of December, according to its financial statements.

Of its roughly $64 billion in outstanding bonds, the company is due to repay $4.8 billion this year, and another $5.6 billion in 2012, underscoring the importance of refinancing to meet its funding needs.