TEPCO "Operating at a Loss, Unable to Pay Fukushima Compensation This Year"… Controversy in Japan

Ministry of Economy and Industry Sets 2022 Special Surcharge at '0 Won'
Ultimately Burden on Citizens... Possible Electricity Rate Increase

The Japanese Ministry of Economy, Trade and Industry (METI) has set the special surcharge paid by Tokyo Electric Power Company (TEPCO) for compensation related to the Fukushima Daiichi nuclear power plant explosion accident at "0 yen" this year, sparking controversy. The reason given is that TEPCO has entered a deficit, but if the amount TEPCO pays decreases, the government must cover the costs of accident handling, ultimately increasing the burden on the public. In a situation where public opinion is already unfavorable due to high inflation and high electricity rates, there are also criticisms that "it is unfair for the public to bear the burden when TEPCO, the party responsible, is not paying."

According to the Asahi Shimbun on the 20th, METI Minister Nishimura Yastoshi approved on the 31st of last month the special surcharge for last year that TEPCO must pay this year at 0 yen. This is the first time in 10 years since the accident that a "zero surcharge" has been approved. Since the special surcharge is paid solely by TEPCO, it is essentially a form of compensation.

The reason cited by METI is TEPCO's deficit. Due to soaring fuel costs, TEPCO's net profit for the last fiscal year (March 2022 to March 2023) is expected to be -317 billion yen (3.1277 trillion KRW), raising concerns about a shift to deficit. Accordingly, the corporation set last year's special surcharge at zero, and it is reported that Minister Nishimura approved this on the 31st of last month.

[Image source=Yonhap News]

METI's related enforcement ordinance stipulates that "(the special surcharge) shall be set at the highest possible amount without impairing the accounting basis." However, in a parliamentary response in 2017, then-METI Minister Seko Hiroshige stated that "(TEPCO) should pay from its profits." This means that if TEPCO is in deficit, it is practically impossible to force TEPCO to pay compensation.

However, TEPCO has agreed to bear the general surcharge and the additional entrusted transmission fee. The Japanese government divides the Fukushima nuclear compensation funding structure into a special surcharge paid only by TEPCO, and a general surcharge borne jointly by nine major power companies owning nuclear plants including TEPCO, Japan Nuclear Fuel Limited (日本原燃), and Japan Atomic Power Company. This year's general surcharge is expected to reach 194.6 billion yen (1.92 trillion KRW), the same as last year. The Japanese government estimates that 7.9 trillion yen (77.8529 trillion KRW) will be spent on Fukushima nuclear plant restoration and compensation, of which 5.5 trillion yen (54.214 trillion KRW) will be covered by the special and general surcharges.

METI originally planned to cover restoration and compensation solely through the special surcharge and the general surcharge from nuclear operators. However, as expected costs increased annually, from 2020 they began charging an entrusted transmission fee under the name of transmission line usage fees. Since new power companies without nuclear plants also have to pay, it is analyzed that this will ultimately lead to widespread electricity rate increases, directly burdening the public.

Moreover, as major power companies simultaneously complain about worsening management due to rising fuel costs, the scale of the general surcharge paid by nuclear operators is also decreasing. According to nonprofit organizations such as the Nuclear Information and Resource Service, the general surcharge in 2021 was 133.7 billion yen (1.3178 trillion KRW), down 29.3 billion yen (288.7 billion KRW) from 163 billion yen (1.6064 trillion KRW) in 2020. This amount was originally supposed to be borne by the major power companies.

[Image source=Yonhap News]

The problem is that since the Japanese government is rushing Fukushima restoration and contaminated water discharge, the government has no choice but to bear the costs temporarily as TEPCO cannot pay. Currently, compensation is structured so that a support organization funded first by the government bears the cost, and power companies repay later. The organization's burden is covered by government bonds, with interest paid by the state, so the longer the repayment is delayed, the more interest payments increase. Because of this, there are criticisms that additional electricity rate hikes are inevitable.

Matsukubo Hajime, Secretary-General of the Nuclear Information and Resource Service, pointed out, "Even if management is difficult, voluntary payment should be possible. It is unfair for TEPCO not to pay the special surcharge when the public is also bearing the burden." He added, "Compensation amounts are expected to increase further. There are many opaque aspects in the compensation system itself, including how surcharges are determined. Overall, the system needs to be reviewed."

However, a METI official told Asahi, "Even until now, the special surcharge has been 'zero' when deficits occur. Although there are opinions that this is unfair, it cannot be helped."

This content was produced with the assistance of AI translation services.