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Newcomers avoid N-plant decommissions / Cost burden shouldered by major power companies

The Economy, Trade and Industry Ministry has decided to make major electric power companies and other operators of nuclear power plants shoulder the decommissioning costs of their nuclear reactors, according to sources. New market entrants, which entered the industry after the liberalization of the electricity retail market, will be exempt.


Funds for decommissioning nuclear power reactors and plants are currently collected from supplementary charges added to the electricity rates of major electric power companies, as these rates are regulated by the government.


Because regulations regarding electricity rates will be completely abolished in 2020 or later, the question of how to share the burden of decommissioning nuclear power reactors has arisen.


A planned scheme will likely be included in a report being compiled by a panel of experts assembled by the ministry to discuss deregulation of electric power businesses by the end of this year.


A budget of ¥30 billion to ¥80 billion per reactor is necessary to decommission nuclear power plants.


Companies and other entities operating nuclear power plants are obliged by law to reserve funds for the future decommissioning of nuclear power plants and related facilities.


Major electric power companies have previously collected funds for their decommission reserves from retail fees charged to users. But users of new entrants have not shouldered the burden, as government-regulated electricity rates do not impact new entrants.


The total amount necessary for decommissioning nuclear reactors as of the end of March this year was about ¥2.9 trillion for 50 reactors in the nation. This excludes several reactors, including Tokyo Electric Power Company Holdings Inc.’s No. 1 to 4 reactors at the Fukushima No. 1 nuclear power plant, where a series of accidents occurred.


Currently, the major power companies’ cash reserves are about ¥1.2 trillion short of the necessary amount.


The ministry aims to abolish the regulations on retail electricity rates from 2020 or later.


To achieve this, the ministry considered introducing a supplementary charge to the power transmission commissions that new entrants pay to major electric power companies for the use of their power transmission networks, to secure future decommission funding.


This would have resulted in a wider range of users of electricity, including customers of new entrants, shouldering the financial burden.


However, the job of decommissioning nuclear power plants is part of the nuclear power generation business.


Thus the ministry with demand that operators of nuclear power plants fulfill their responsibilities using their own revenue to secure the necessary funds.


The ministry plans to secure funds to decommission the No. 1 and 2 reactors of Kansai Electric Power Co.’s Mihama nuclear power plant and the Nos. 1 to 6 reactors of Shikoku Electric Power Co.’s Ikata nuclear power plant by applying additional charges to power transmission commissions.


Because the estimated costs to decommission the Fukushima No. 1 nuclear power plant are much higher — in the trillions of yen — the ministry will consider decommissioning options after talks are concluded with a separate panel of experts.


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