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information about Fukushima published in English in Japanese media info publiée en anglais dans la presse japonaise

Making newcomers pay: Is that fair?

September 29, 2016

EDITORIAL: Costs of reactor scrapping really nothing to do with new players

http://www.asahi.com/ajw/articles/AJ201609290032.html

 

An expert panel set up by the industry ministry to figure out ways to fund the cost of scrapping nuclear reactors is set to consider an idea that seems to have no chance of being accepted by consumers.

The group of experts advising the Ministry of Economy, Trade and Industry held its first meeting Sept. 27. The members will weigh a proposal to force new players in the power supply market to shoulder a portion of the costs of decommissioning nuclear reactors operated by established electric utilities.

The new electricity providers were created out of power market deregulation and operate no nuclear power plants. They use the transmission grids controlled by the big utilities when they sell their customers electricity they generate or buy from others.

The proposal would raise the charges for using the grids to force the new power providers to pay part of the costs of reactor decommissioning. This would result in a portion of the costs being passed on to the customers of the smaller power firms through higher electricity bills.

The scope of the power market liberalization was expanded this spring to households.

Japan’s power market used to be tightly regulated, with all households required to buy electricity from one of the large utilities monopolizing the regional markets. As a result, most Japanese consumers have been using electricity generated by nuclear power plants.

So, the proponents of the proposal say, even consumers who have started buying power from new providers should shoulder part of the costs of shutting down and dismantling reactors. This is an argument that gives a privileged status to nuclear power generation.

Apply this argument to other essential public utilities like running water and gas.

Imagine this: You subscribe to the services of a new gas supplier after moving to a new location and then receive a bill from the previous supplier for the costs of disposing of your now unused equipment. Would you agree to pay the bill?

The aim of power deregulation is to promote competition in the market by encouraging new entrants to challenge established utilities. This also allows consumers to choose their power supplies on the basis of lower prices, better environmental performances and other reasons.

If newcomers are required to foot a part of the bill for decommissioning reactors, the conditions in the market for both competition among players and the choices by consumers will be distorted.

Why has such an unreasonable idea been put on the table, in the first place?

The costs of decommissioning reactors operated by major utilities have been shouldered by their customers through higher electricity rates.

But the system to pass on decommissioning costs to consumers through rate hikes will have to be scrapped sooner or later due to market deregulation.

The proposal is aimed at securing a source of funds to finance the costly process by creating a system to raise the fees newcomers pay for using the power grids.

As they are losing customers to new power suppliers due to market liberalization, established utilities are obviously concerned about their financial future.

As they discuss the issue, the members of the expert panel will take account of the plans to dismantle the reactors at the disaster-stricken Fukushima No. 1 nuclear power plant.

Decommissioning an ordinary reactor costs around 80 billion yen ($789 million) even if it is a large one. But the process will be far costlier for the reactors at the Fukushima plant that melted down in 2011. The extra costs for the reactors have been estimated in the range of several to more than a dozen trillion yen per unit. So the Fukushima decommissioning is a totally different story.

In a July news conference, Tokyo Electric Power Co., which operated the crippled nuclear plant, asked for support.

It has been decided that another expert panel will discuss aid to the utility for the work along with plans to restructure its organization and operations.

The first order of business for the panel is to make rigorous estimates of the costs involved.

The proposed system to force new power suppliers to bear part of the costs of decommissioning reactors could provide financial support to nuclear power generation by big utilities. At the same time, it could serve as a disincentive for many newcomers’ investment in renewable energy sources.

That is an unacceptable situation.

--The Asahi Shimbun, Sept. 29

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