JAPAN | Resumption of nuclear reactors this year in serious doubt

Posted on July 8, 2011

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JAPAN | ASAHI SHIMBUN | 8 July 2011

Confusion in the government, an e-mail scandal and widespread anger have shattered the blueprint to restart nuclear reactors this summer, leading to possible power shortages that could debilitate manufacturers and increase electricity bills.

Electric power industry insiders are now resigned to resuming operations at nuclear power plants that have undergone periodic inspections only in 2012. They are unsure whether restarts will be possible even then.

Prime Minister Naoto Kan’s recent decision to conduct stress tests at all nuclear power plants stunned not only industry ministry officials, but also the Nuclear and Industrial Safety Agency (NISA).

And revelations that Kyushu Electric Power Co. employees sent pro-nuclear energy e-mails to a televised hearing to tilt public sentiment in the company’s favor have heightened the indignation of local government officials.

On July 7, Hideo Kishimoto, mayor of Genkai, Saga Prefecture, which hosts Kyushu Electric’s Genkai nuclear power plant, said he will retract his decision to allow the resumption of operations of the No. 2 and No. 3 reactors, a move that has already affected the plans of other utilities.

“Genkai, which was the front-runner, has retreated to the back of the pack, so (resumption of operations) may be difficult even next year, let alone this summer,” a senior Tokyo Electric Power Co. official said.

A senior official with Kansai Electric Power Co. said: “I hope this does not mean we are back at square one, but I am very concerned. We have no idea what the future will be like.”

Other nuclear power plants were awaiting a resumption of operations after completing periodic inspections, such as the No. 3 reactor at the Ikata nuclear plant operated by Shikoku Electric Power Co. in Ehime Prefecture.

But Shikoku Electric officials on July 8 said the resumption of the reactor, scheduled for July 10, would be delayed.

Electric power industry officials had hoped that the resumption of operations at those plants would lead to similar actions at plants operated by Kansai Electric, which is highly dependent on nuclear energy, and Tohoku Electric Power Co., which would contribute to the rebuilding process following the March 11 Great East Japan Earthquake.

“If one plant began operations, it would make it easier for other regions to follow suit,” said an official with the Federation of Electric Power Companies of Japan.

With companies and households being forced to conserve energy, electric power company officials felt it would be easier to win over local communities hosting nuclear plants.

One senior electric power company official now says, “It would have been easier to ask for the resumption of nuclear reactors in the summer when there is a shortage of electricity.”

However, even that scenario seems all but impossible.

Utilities have provided surplus electricity to neighboring electric power companies facing shortages. But this year, with reactors idle, the surplus amount is expected to drop.

Even Chubu Electric Power Co., which has been able to provide a stable supply of electricity this summer, has begun setting conditions on providing surplus electricity to others, such as the forecasted temperatures for the following day.

Other supply sources will be needed, but natural energy, such as solar and wind power, is currently not technologically advanced enough to serve as a viable alternative for the country’s needs.

The short-term response will have to be thermal power plants. Almost all of the plants that had stopped operations are now running.

But it would take at least six years, including environmental assessment studies, to construct a new thermal power plant, according to a TEPCO official.

After being hit by a hat trick of problems, the Ministry of Economy, Trade and Industry (METI) is in no condition to help the electric power industry.

One reason Kishimoto retracted his approval to restart the Genkai reactors was that Kan announced the stress tests after industry minister Banri Kaieda gave assurances that all safety measures had been taken appropriately.

Kaieda, also infuriated by Kan’s stance, indicated he would resign over the confusion.

Exacerbating the situation at METI, a career ministry bureaucrat is now the target of an insider trading investigation.

“METI has never before been hated like this,” a high-ranking official said.

Kaieda and METI officials had been in the forefront in drawing up the scenario of resuming operations at nuclear plants. That momentum has clearly been sidetracked by the strong criticism directed at the government.

One METI official said the blame rests squarely on Kan’s shoulders.

“While we had made preparations for the resumption of operations at nuclear plants, the prime minister simply undercut us. It will be impossible to resume operations this summer,” the official said.

NISA officials only learned about the stress tests on the morning of July 6, when Kaieda made the announcement at Kan’s instruction.

They said they have no idea when the tests will be conducted or what their contents will be like.

The 19 reactors that are currently in operation will be shut down by next spring for regular inspections. If there are no restarts of reactors before then, the nation’s 54 reactors would all be off-line, depriving Japan of 30 percent of its electricity supply.

Such a scenario could have devastating effects on corporate activity.

SMBC Nikko Securities Inc. calculated economic activity in August 2012 under two situations: one with no nuclear power and one with resumed reactor operations.

According to the study, the mining and manufacturing index would drop by 8.4 percent if all nuclear plants stopped operations.

Manufacturers expressed anxieties about the nation’s electricity supply even before the latest developments.

In May, a METI survey of major manufacturers showed that 69 percent of the 163 companies that responded said moves to relocate production bases abroad would likely accelerate if an electricity shortage were to unfold in Japan.

“After the (March 11) disasters, there has been an electricity shortage and higher electricity rates. Unless the energy policy is settled, there will be a higher risk of moving production overseas,” said Daisuke Yamada, an executive with Mizuho Corporate Bank.

The Institute of Energy Economics, Japan, forecast conditions if thermal power plants were to make up for the lost electricity from a full stoppage of nuclear power generation in Japan.

Under that scenario, fossil fuel expenses for fiscal 2012 would increase by 3.5 trillion yen ($42.7 billion) over the current fiscal year, leading to an 18-percent rise in the electricity bill for the standard household, or about 1,049 yen per month.

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