TEPCO drafting new restructuring plan to face Fukushima consequences

Tokyo Electric Power Company Holdings, Inc. (TEPCO) is formulating a new restructuring plan. It was expected last year, but the company proved unable to forecast its income and expenditures. The plan is essential to raise funds for compensation, decommissioning, decontamination work, and other expenses caused by the 2011 Fukushima nuclear accident. It is also a prerequisite for TEPCO to receive support from government and financial institutions. Of the ¥23.4 trillion to be spent to cover the damages of the accident, TEPCO is responsible for ¥17 trillion, and there is a framework under which the firm is paying out ¥500 billion each year.
The company has revised its restructuring scheme several times since 2012 and hopes to draft a new, permanent one within 2025. The drafting of the new plan has been delayed due to several issues at the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture, which is deemed a key component of the company’s restructuring. TEPCO wants to reactivate the nuclear plant this summer, and it expects that this move will improve its earnings by about ¥100 billion. However, several troubles, including inadequate anti-terrorism measures, have delayed the restarting process and increased distrust toward the company. TEPCO is also under pressure due to the liberalization of electricity retailing. It has lost customers to new companies operating in the sector, and its market share for ordinary households has significantly fallen. Unless TEPCO restructures and improves its profitability, it will lack the financial resources to grow and fulfill its responsibilities to rebuild Fukushima. The company’s first steps toward better operational efficiency, including the merger of its thermal power generation division with that of Chubu Electric Power Co. in 2019, have not achieved notable results. TEPCO should rationalize further its activities and explore ways to cooperate with other companies, including foreign ones.