Bloomberg News

Tepco, Kansai Support Nuclear Future, Defying Opposition

June 29, 2011

(Updates with Osaka mayor’s comment in sixth paragraph.)

June 29 (Bloomberg) -- Tokyo Electric Power Co. led Japanese utilities in rallying around a nuclear future, defying growing public opposition to atomic energy after the worst radiation accident in 25 years.

Shareholders of Tepco, as Japan’s biggest utility is known, voted to continue with nuclear power yesterday at the company’s first annual meeting since the crisis at its Fukushima Dai-Ichi nuclear plant wiped about $36 billion off its market value. Kansai Electric Power Co. today reinforced the status quo, with shareholders rejecting a motion to halt reactors.

The votes in the wake of the March 11 earthquake and tsunami that caused meltdowns at Fukushima show Japan’s reliance on atomic energy even as opposition grows. Shareholders of Tohoku Electric Power Co. and other regional energy providers also voted down proposals against nuclear power.

“Everybody in Japan has a stake in the country’s energy future, even if they don’t own a stake in a power company,” Jeff Kingston, head of Temple University’s Asian Studies program at its Tokyo campus, said by telephone. The utilities are “trying as desperately as possible to circle the wagons, marginalize public opinion and proceed with business as usual,” he said.

Kansai Electric, dependent on atomic energy for 43 percent of its power output and Tepco’s biggest domestic rival, faced comments from shareholders for almost five hours, its longest annual meeting. Osaka Mayor Kunio Hiramatsu, whose city is the utility’s biggest shareholder, called on the company to develop alternatives to nuclear energy.

Sustaining Growth

“With the stability of our electricity supply in question, governments and citizens need to discuss adopting energy policies that sustain economic growth,” Hiramatsu said. “We should cooperate with industry in these efforts.”

Tepco President Toshio Nishizawa, who took over after the shareholders meeting, plans to hold on to assets related to its power business and sell recreation facilities and shareholdings in its affiliates, he said in a June 16 interview that was embargoed until late yesterday.

“Each asset needs to be sold at the best time and in the best way,” said Nishizawa, 60, adding that the utility will rely on government funding for compensation payments to victims.

Tepco plans to sell its “non-core” assets within three years, Nishizawa said today at his first press conference since he was confirmed as president of the utility.

LNG Supply

As part of the fund-raising efforts, Tepco may package the building housing its headquarters in central Tokyo into securities for sale, the Tokyo Shimbun reported today citing Nishizawa. The building may be valued at 39 billion yen ($481 million), the newspaper said.

Liquefied natural gas-fired plants will become the main source of electricity generation for Tepco, the Nikkei newspaper reported today, citing Nishizawa. The company plans to join an Australian project that will supply 20 percent of its LNG requirements, he told the Nikkei, which didn’t identify the venture.

Tepco annually imports about 20 million metric tons of LNG, or about 28 percent of Japan’s overall purchases of the fuel, according to data compiled by the company and the finance ministry.

Kansai Electric, which supplies Japan’s second-largest commercial region, this month joined Tepco in asking users to cut consumption this summer by 15 percent to avert blackouts after the disaster led to the closure of some plants and delayed resumption of others shut for maintenance.

‘Tepco Needs Nuclear’

Nuclear power accounted for almost a third of Japan’s energy requirements before the disaster.

“I was against the proposal to withdraw from nuclear power,” Takaaki Matsui, a 27-year-old engineer and shareholder of Tepco, said after attending the company’s annual meeting yesterday. “Tepco needs nuclear power to keep supply and demand balanced.”

The votes of support came a week after Katsuhiko Ishibashi, a seismology professor at Kobe University, called for the closure of the nation’s 54 atomic reactors because none of them can be guaranteed to withstand strong earthquakes.

Ishibashi earlier warned of a catastrophic nuclear disaster after Tepco’s Kashiwazaki Kariwa station was damaged by an earthquake in 2007, leading to radiation leaks.

Opposition to nuclear power is increasing in Japan following the crisis.

The Nikkei newspaper reported this week that 69 percent of respondents to a telephone poll oppose the restart of nuclear reactors currently shut for maintenance.

Nuclear Opposition

About 47 percent of 893 people polled from June 24 to June 26 want to reduce the number of atomic plants, an increase of 5 percent from a month earlier, the newspaper said.

The Fukushima disaster displaced 50,000 households after radiation leaked into the air, soil and sea. Tepco may face as much as 11 trillion yen in compensation claims, according to Bank of America Corp.’s Merrill Lynch unit.

The utility posted a loss of 1.25 trillion yen for the year ended March 31, including a 1.1 trillion yen charge related to costs from the accident.

Tepco, whose shares have plunged 85 percent since the earthquake, had record attendance at yesterday’s meeting with 9,309 shareholders, compared with the company’s expectations of 5,600. It was the longest meeting on record, the company said.

A group of shareholders that’s been proposing a motion to stop Tepco from using atomic energy for the past two decades, tried again to rally support for withdrawing from nuclear energy. The proposal was voted down.

“We can’t give up on this - it’s too important,” said Hisataka Yamasaki, a member of the shareholders group that brought the proposal against nuclear power at Tepco’s meeting yesterday. “Everybody knew that Dai-Ichi was at risk from an earthquake and tsunami. It shows how hard it is to change the government’s view of nuclear that the company wasn’t forced to make the proper preparations.”

--With assistance from Pavel Alpeyev, Chisaki Watanabe and Shunichi Ozasa in Tokyo and Stuart Biggs and Kanoko Matsuyama in Osaka. Editors: Drew Gibson, Amit Prakash

To contact the reporters on this story: Yuji Okada in Tokyo at yokada6@bloomberg.net; Shigeru Sato in Tokyo at ssato10@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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