Editorial: Compensation for the nuclear power plant accident
Oct. 22, 2013
Framework must be overhauled
Once a devastating accident occurs at a nuclear power plant, the power company will be unable to manage the ensuing clean-up by itself, and in the end the public will continue to bear the burden. Yesterday’s release of the results of a study of the Tokyo Electric Power Company (TEPCO) conducted by the Board of Audit of Japan once again demonstrated the size of that burden.
TEPCO can borrow up to 5 trillion yen from the central government through the Nuclear Damage Liability Facilitation Fund in order to cover compensation for victims of the accident at the Fukushima No. 1 (Daiichi) nuclear power plant and for decontamination. The Board of Audit estimates that under the framework for this aid, if the entire amount is spent, it will take up to 31 years for the central government to recover the funds, and nearly 80 billion yen in interest will effectively become a public financial burden.
But it is clear that 5 trillion yen is not going to be enough. More than 3 trillion yen in compensation subsidies has already been allocated to TEPCO, but there is more compensation yet to be paid. And the costs of decontamination, dealing with contaminated water and decommissioning the reactors will inevitably balloon in the future. There is no reason to believe TEPCO will be able to deal with these problems.
Simply put, the framework established in the expectation of future repayment by TEPCO is on the verge of collapse. In order to ensure that the work can be safely carried out through to the decommissioning of the reactors, it is essential to create a new framework before it’s too late.
It is now clear that the procedures for compensation are not always working well. Although compensation to individuals is being paid on average about 35 days after a claim is filed, it took more than a year for 120 claims to be paid.
Considering the pain of the victims who cannot return home, it’s only natural that the Board of Audit sought a prompt review.
TEPCO’s management must first consider the public’s scrutiny and then begin by acknowledging their own responsibility.
But the Board of Audit did not launch its study of TEPCO until after the Nuclear Damage Liability Facilitation Fund had kicked in 1 trillion yen and the company had been effectively nationalized. TEPCO’s management now must answer to the entire nation.
Under the current support framework, Chugoku Electric and other power companies besides TEPCO are also contributing to the Liability Facilitation Fund. Compensation for the accident and the decontamination work are already under a framework that is not viable unless the entire nation shoulders part of the burden.
But, looking at TEPCO recently, we find their awareness suspect. This is best illustrated by the leaks of contaminated water that have occurred through a series of careless errors. The Board of Audit reported that it found many instances in which TEPCO contracted out compensation-related work to affiliated companies without accepting bids from others.
The fundamental factor that led to the current situation is that TEPCO has failed to fully accept its responsibility for causing the accident. Belief in the so-called “myth of safety” led to the meltdowns, the hydrogen explosions and the release of radiation into the atmosphere. From the standpoint of the victims, in order to move forward with compensation and decontamination TEPCO must first get back to reflecting on the accident itself.
But considering how difficult the remaining clean-up will be, fears will linger if the job is left up to TEPCO alone.
Some people believe that the cost of compensation and decontamination alone will exceed 10 trillion yen. An even more astronomical amount of time and money will be needed to deal with the contaminated water and for decommissioning of the reactors.
A revised Electric Utilities Industry Law was resubmitted to the Diet at the extraordinary session that opened the day before yesterday. The bill would completely deregulate the electric power industry and separate the generation and distribution of electric power. This sort of reform of the power industry will naturally threaten TEPCO’s continued existence. It is time to begin a national debate on a complete overhaul of the framework for dealing with the accident.
This is where the government comes in. But, in addition to deciding to raise the consumption tax, the Abe administration has declared its intention to move up the abolition of the special corporate tax for reconstruction. Does this make sense?
Nuclear power was promoted as a matter of national policy, and this led to the accident. If we reflect on these developments, there is no alternative but for the government to take the lead on the clean-up at Fukushima and to see it through.
(Originally published on October 17, 2013)
Once a devastating accident occurs at a nuclear power plant, the power company will be unable to manage the ensuing clean-up by itself, and in the end the public will continue to bear the burden. Yesterday’s release of the results of a study of the Tokyo Electric Power Company (TEPCO) conducted by the Board of Audit of Japan once again demonstrated the size of that burden.
TEPCO can borrow up to 5 trillion yen from the central government through the Nuclear Damage Liability Facilitation Fund in order to cover compensation for victims of the accident at the Fukushima No. 1 (Daiichi) nuclear power plant and for decontamination. The Board of Audit estimates that under the framework for this aid, if the entire amount is spent, it will take up to 31 years for the central government to recover the funds, and nearly 80 billion yen in interest will effectively become a public financial burden.
But it is clear that 5 trillion yen is not going to be enough. More than 3 trillion yen in compensation subsidies has already been allocated to TEPCO, but there is more compensation yet to be paid. And the costs of decontamination, dealing with contaminated water and decommissioning the reactors will inevitably balloon in the future. There is no reason to believe TEPCO will be able to deal with these problems.
Simply put, the framework established in the expectation of future repayment by TEPCO is on the verge of collapse. In order to ensure that the work can be safely carried out through to the decommissioning of the reactors, it is essential to create a new framework before it’s too late.
It is now clear that the procedures for compensation are not always working well. Although compensation to individuals is being paid on average about 35 days after a claim is filed, it took more than a year for 120 claims to be paid.
Considering the pain of the victims who cannot return home, it’s only natural that the Board of Audit sought a prompt review.
TEPCO’s management must first consider the public’s scrutiny and then begin by acknowledging their own responsibility.
But the Board of Audit did not launch its study of TEPCO until after the Nuclear Damage Liability Facilitation Fund had kicked in 1 trillion yen and the company had been effectively nationalized. TEPCO’s management now must answer to the entire nation.
Under the current support framework, Chugoku Electric and other power companies besides TEPCO are also contributing to the Liability Facilitation Fund. Compensation for the accident and the decontamination work are already under a framework that is not viable unless the entire nation shoulders part of the burden.
But, looking at TEPCO recently, we find their awareness suspect. This is best illustrated by the leaks of contaminated water that have occurred through a series of careless errors. The Board of Audit reported that it found many instances in which TEPCO contracted out compensation-related work to affiliated companies without accepting bids from others.
The fundamental factor that led to the current situation is that TEPCO has failed to fully accept its responsibility for causing the accident. Belief in the so-called “myth of safety” led to the meltdowns, the hydrogen explosions and the release of radiation into the atmosphere. From the standpoint of the victims, in order to move forward with compensation and decontamination TEPCO must first get back to reflecting on the accident itself.
But considering how difficult the remaining clean-up will be, fears will linger if the job is left up to TEPCO alone.
Some people believe that the cost of compensation and decontamination alone will exceed 10 trillion yen. An even more astronomical amount of time and money will be needed to deal with the contaminated water and for decommissioning of the reactors.
A revised Electric Utilities Industry Law was resubmitted to the Diet at the extraordinary session that opened the day before yesterday. The bill would completely deregulate the electric power industry and separate the generation and distribution of electric power. This sort of reform of the power industry will naturally threaten TEPCO’s continued existence. It is time to begin a national debate on a complete overhaul of the framework for dealing with the accident.
This is where the government comes in. But, in addition to deciding to raise the consumption tax, the Abe administration has declared its intention to move up the abolition of the special corporate tax for reconstruction. Does this make sense?
Nuclear power was promoted as a matter of national policy, and this led to the accident. If we reflect on these developments, there is no alternative but for the government to take the lead on the clean-up at Fukushima and to see it through.
(Originally published on October 17, 2013)
