The bailout also gives the government a majority share of the former monopoly, a change that will formally take place after Tepco’s annual shareholders meeting next month, according to the Kyodo news agency. Tepco will be forced to follow a restructuring plan that includes electricity rate increases, management changes and $41.4 billion in cost-cutting measures over the next decade.
“Without the state funds, [Tepco] cannot provide a stable supply of electricity and pay for compensation and decommissioning costs,” said Industry Minister Yukio Edano, who approved the takeover plan.
Tepco fell into financial crisis last year after a triple meltdown at the Fukushima Daiichi plant, where primary and backup cooling systems were knocked out by the 9.0-magnitude earthquake and ensuing tsunami of March 11, 2011. The company, much-criticized for its safety oversights at the plant, will need decades to decommission the now-stabilized reactors, as well as trillions of yen for cleanup.
The government, policy experts say, could use its control of Tepco to spearhead changes in Japan’s traditional system of electricity distribution, long dominated by regional monopolies whose charges are among the world’s highest. The government could open the electricity grid to competitors, a step Edano has advocated. The industry minister had also threatened to allow Tepco to fail if it did not agree to a management overhaul.
Tepco has selected a new government-approved chairman, Kazuhiko Shimokobe, a bankruptcy lawyer and corporate restructuring specialist. Shimokobe recently oversaw the Nuclear Damage Liability Facilitation Fund, a public body created to help Tepco pay compensation to nuclear evacuees.
Tepco remains the sole provider of electricity for a large swath of eastern Japan, including Tokyo. The utility, according to its government-submitted recovery plan, wants to restart seven idled reactors at its Kashiwazaki Kariwa nuclear plant, on Japan’s western coast.
In the aftermath of the March 11 disaster, however, the Japanese public — along with many local officials — has come out strongly against nuclear power. That opposition has quickly turned Japan into an essentially non-nuclear nation. Mandatory, every-13-month checkups for reactors have turned into open-ended shutdowns as the central government finds itself unable to win local approval for the restarts. This past weekend, Japan took its last operating reactor offline, completely removing nuclear power from the grid for the first time in more than four decades.
In addition to the seven-unit Kashiwazaki Kariwa plant in western Japan and the six-unit Fukushima Daiichi facility, Tepco also operates the four-unit Fukushima Daini plant, which was shut down immediately after the disaster.