Tokyo Electric Power Company has shut down 13 of its reactors for safety checks and will close the remaining four by mid-April. They will remain closed until local prefectures give the go-ahead to restart them.
Kashiwazaki-Kariwa 5 is the next reactor scheduled to go off line, in early March, followed by Kashiwazaki-Kariwa 5 and Fukushima 1-2 later in the month: then finally Fukushima 1-6 on April 15.
The issue is one of public confidence, and Tepco has clearly decided to put the responsibility for restarting reactors to the test of public opinion, as represented by the decisions of local government. Meanwhile the government has decided to allow Tepco's Kashiwazaki-Kariwa 3 and Chubu's Hamaoka 4 to run with cracks in core shrouds left unrepaired, on condition that the cracks are regularly inspected by government inspectors. This is the first time that the Nuclear Industrial and Safety Agency has permitted unrepaired reactors to operate; the policy allowing it was adopted in December and applies where safety can be assured for five years.
For its part in last year's maintenance data falsification scandal GE has agreed to pay compensation to Tepco and has acknowledged its failure to meet the terms of its maintenance contract. In particular, GE had failed to complete a series of 34 checks it was contracted to carry out at Kashiwazaki-Kariwa 2, where a subsequent investigation discovered a crack that went vitually all round a portion of the core shroud.
Tepco has announced that it plans to slash capital investment, put most of its construction plans on hold, and cut debts by $2.5 billion a year for three years. There are indications that it may enter other energy markets. This shift in strategy is to defend its operating environment. A number of new companies were, and are still, expected to try and acquire some of Tepco's industrial and commercial customers following partial deregulation of the electricity supply market last year. Tepco's president, Nobuya Minami, said: "Competition has been slower paced than I had expected. We expected more competitors. However, up to now, we have seen two new entrants, and 13 of our customers have been taken away." The Japanese market is attracting new competitors with experience in other deregulated markets, However, Tepco sees the main threat as coming from Japanese industrial giants, like Nippon Steel, that have long generated much of their own electricity, and have growing power surpluses.
The next stage of deregulation will come after a review of progress, scheduled for 2003.
Tepco's debt load has always been huge, and in a more competitive environment, it prefers to reduce debt exposure by cutting capital expenditure. Delays in the construction of 22 power stations have upset relations with local and central government but Tepco is standing firm on its decision. Demand for power is almost stagnant due to the state of Japan's economy. Previously, Tepco's building plans would have gone ahead, as maintaining excess capacity was financially viable. Now, with the threat of leaner competitors moving in, Tepco cannot afford to saddle itself with costly, under-utilised generating capacity.
Deregulation has also brought freedom to enter new markets, and the chance to expand via acquisitions. Minami said that this is something Tepco is considering. It already owns a 37.5 per cent stake in TTNet, a Japanese telecoms group. However, he added that the most obvious target, Tokyo Gas, would almost certainly be ruled off-limits by monopoly watchdogs, and there would be little to gain from buying other regional power companies. Smaller gas providers make more sense. Tepco has minority stakes in several gas providers, and there are indications that it could be looking to buy larger stakes.
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