USA | Tokyo Electric Power Defeats Shareholders’ Efforts to Exit Nuclear Business

Posted on June 28, 2011

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USA | NEW YORK TIMES | 28 June 2011

TOKYO — The operator of the stricken Fukushima Daiichi nuclear plant met with angry shareholders on Tuesday, offering profuse apologies as hecklers shouted abuse from a rowdy floor. But a motion that would have forced the company to abandon its nuclear program was defeated.

The management of the operating company, Tokyo Electric Power, or Tepco, as it is known, also pushed through the appointment of 17 board members, including the reappointment of its 71-year-old chairman, raising questions about the extent of the overhaul that the company promised after the nuclear disaster.

“I apologize from the bottom of my heart for the trouble and fear that we have brought to our shareholders, and to society,” the chairman, Tsunehisa Katsumata , said at the shareholders’ meeting at a tightly guarded Tokyo hotel.

“We will do our utmost to bring the accident to a resolution and to work toward our mission of providing a stable source of electricity,” he said.

Some investors refused to be placated. “Go jump into a reactor and die!” one elderly man shouted at the row of executives, before being escorted out by attendants.

At one point, when Mr. Katsumata tried to wrap up a question-and-answer session, angry shareholders rushed toward the stage. The session continued.

With her voice shaking, a woman told board members that they were unfit to lead the company. She said the company had ignored warnings about the dangers of nuclear power. “Shame on you!” she cried. “You should all be sacked.”

Tokyo Electric has been fighting for its survival since the March 11 quake and tsunami ravaged the Fukushima Daiichi nuclear power plant, about 140 miles north of Tokyo, leading to hydrogen explosions and releases of radioactive material in the worst nuclear accident since the Chernobyl disaster in Ukraine in 1986.

At least 80,000 people in northeastern Japan have fled their homes, and farmers and fishermen in the area have had to abandon their livelihoods. Factories within a 20-kilometer evacuation zone have had to move or close.

Tokyo Electric could face as much as 11 trillion yen, or $136 billion, in compensation claims, analysts have estimated. The cost of dismantling the Fukushima Daiichi plant could reach an additional 20 trillion yen, according to the Japan Center for Economic Research.

The dismal forecasts have cast a dark cloud on the financial health of Japan’s largest utility, a company with strong links to government that has dominated the country’s power industry for decades. Last week, Moody’s cut Tokyo Electric’s credit rating to junk status, after a similar move by Standard & Poor’s last month. Tokyo Electric shares have plunged more than 80 percent since the earthquake.

Prime Minister Naoto Kan has said that the government should provide a safety net for Tokyo Electric, to keep the company afloat while it pays damage claims. Japan is considering setting aside about 230 billion yen from a planned 2 trillion yen supplementary budget to help Tokyo Electric, according to Bloomberg News.

Mr. Kan has been eager to hold Tokyo Electric accountable and to avoid having to dip into public money. But he also wants the company to avoid bankruptcy, which would bring chaos to the stock and credit markets.

The company had about 933,000 shareholders at the end of March. At that time, financial institutions held about 30 percent of Tokyo Electric shares, while other corporations had 5 percent. Individual investors held about 44 percent, while overseas investors held 17 percent.

Nevertheless, many analysts have underscored the need for change at Tokyo Electric. “A fundamental structural overhaul is needed at the board level to enable Tepco to rebuild its reputation and recover financially,” Glass Lewis , a United States company that advises institutional investors, said in a report before the shareholder meeting.

Individual investors at the meeting on Tuesday aired similar demands.

About 9,300 investors attended the meeting, the most in Tokyo Electric’s history, forming long lines at the hotel location. Antinuclear demonstrators also gathered at a nearby park to urge the company to abandon nuclear power.

But even as Tokyo Electric’s board faced a hostile crowd Tuesday, the company management, which has institutional investors and some individual investors on its side, was never in any real danger of defeat.

Tokyo Electric won the approval for the appointment of 17 board members, including Mr. Katsumata, the chairman, and Toshio Nishizawa , a longtime company executive, as president. All but one of the directors are company executives, according to company records.

A more contentious motion was brought by 402 shareholders who asked Tokyo Electric to shut down its existing nuclear power plants and to stop building new ones. A similar motion had been rejected at each annual shareholders’ meeting for the last two decades. “Do you really want to go down in history as rejecting this motion?” asked an investor who identified himself as Masaki Kito , a lawyer. “Are you prepared to be responsible for the next big accident?”

But the motion was voted down, ending the six-hour meeting.

Still, the shareholders’ demands mirror a growing antinuclear sentiment among the Japanese public. On June 11, tens of thousands marched across the country, calling for an end to nuclear power in Japan. In a poll published by the Nikkei business newspaper on Monday, 47 percent of respondents said they wanted fewer nuclear power plants in Japan, an increase of 5 percent from a month earlier.

Most experts agree that it would be difficult for Japan to permanently close all of its 54 plants without substantial fuel costs, as well as a large increase in carbon emissions. Before the Fukushima crisis, nuclear power provided 30 percent of the electricity needs of Japan, a resource-poor country with few domestic sources of energy to draw on.

Still, 35 of Japan’s 54 rectors are already closed for maintenance or safety checks, and others are scheduled to follow, which could leave the country without any nuclear power by next April. To make up for the shortfall, power companies around Japan have increased their purchases of natural gas.

At the stricken plant, meanwhile, recovery efforts have been slow and perilous. A circulation system that would allow the plant’s reactors to re-use cooling water — which officials have called an important step toward resolving the crisis — was started up Monday but shut down just 90 minutes later. The system was restarted on Tuesday afternoon.

The system was designed to reduce the amount of contaminated runoff from the reactors, which are being kept cool with water. Tokyo Electric officials have said that 110,000 tons of radioactive water has already accumulated under the reactors, and that there is a danger that the water will overflow if it cannot be safely removed or recirculated.

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