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24 March, 2017

TEPCO Open to Integrate Nuclear, Transmission and Distribution Businesses

On March 22, the Tokyo Electric Power Co. (TEPCO) and the Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF) released an outline of TEPCO's revised restructuring plan. It will be the first full revision of the plan since it was issued in January 2014.

At its core is the integration of TEPCO’s nuclear, transmission and distribution businesses with other power companies, to meet expanding costs—now put at JPY 21.5 trillion (USD195.5 billion at USD1=JPY110)—for decommissioning the Fukushima Daiichi Nuclear Power Plants and payments of compensation.

The outline clearly indicates openness to proposals from other power companies on reorganization and integration. Most major companies, however, worry that if they cooperate with TEPCO—effectively under government control—their profits will be tapped to cover compensation costs. For that reason, rules for the government’s involvement and the allocation of costs will be established in the revised plan.

Even so, it would be some time before benefits could be realized through the involvement of other companies. Accordingly, “funds will be ensured,” the parties stated, “by productivity improvements in the transmission, distribution and nuclear businesses,” as well as cost-cutting. Costs for transmission and distribution will be lowered to the level of leading companies in Europe and the United States.

Meanwhile, in its nuclear business, TEPCO will promptly increase efforts to restore public confidence toward restarting the Kashiwazaki Kariwa Nuclear Power Plants (seven units) in Niigata Prefecture.

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