Bloomberg News

Noda Ends Japan Nuclear Freeze, Risking Backlash at Polls

June 18, 2012

Kansai Electric Power Co.'s Ohi Nuclear Power Station

The No. 4, from left, No. 3, No. 2 and No. 1 reactor buildings stand at Kansai Electric Power Co.'s Ohi nuclear power station in Ohi Town, Fukui Prefecture, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

Prime Minister Yoshihiko Noda ended Japan’s month-long freeze on nuclear power, approving a reactor restart that combined with a tax increase may undermine his political support.

Two reactors at Kansai Electric Power Co.’s Ohi nuclear plant can be operated safely, Noda declared June 16 after meeting with three Cabinet ministers who share approval authority. The utility, which serves the $1 trillion economy of Japan’s second-biggest urban region, said it would immediately begin work to start one reactor.

Japan is reopening nuclear plants that provided about 30 percent of its energy before being idled after the March 2011 meltdowns at Tokyo Electric Power Co.’s Fukushima station. The decision followed by one day a deal with opposition parties to abandon some campaign pledges in return for agreement to double the nation’s consumption tax. Majorities in public opinion polls oppose both the restarts and the tax increase.

Noda “could end up like all his predecessors in the dustbin of history very quickly,” said Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University’s Tokyo campus. “The dustbin is waiting for him.”

Seventy-one percent of respondents to a Mainichi newspaper poll published on June 4 objected to a speedy restart of the reactors in Ohi. In a separate poll released June 5 by the Pew Research Center, 70 percent of Japanese said the country should reduce its reliance on nuclear energy and 52 percent feared they or their families may have been exposed to radiation.

Mistrust Soars

“We have sufficient safety measures in place to protect the plant’s fuel and prevent a large-scale leak of radioactive material into the environment, even if the plant were to be struck by an earthquake and tsunami like the one that hit Fukushima,” Noda said in a written response on June 15 to questions from Bloomberg News. Public mistrust of the nuclear power industry soared after the Fukushima reactors leaked radiation that forced 160,000 people to evacuate.

Noda, who took office in September, vowed to stake his career on doubling the nation’s 5 percent sales tax to fund welfare costs and lower the world’s largest debt. Earlier this month the one-time finance minister reshuffled his Cabinet in an effort to win opposition backing for his bill.

Noda’s Democratic Party of Japan agreed to shelve plans for a minimum guaranteed pension as part of a deal on the tax increase with the opposition Liberal Democratic Party and the New Komeito party. LDP lawmaker Nobutaka Machimura said the parties hope to pass the legislation in the lower house of parliament before the Diet session ends on June 21.

Unpopular Tax

The tax legislation is also unpopular, with 56 percent of respondents expressing opposition in a poll published in the Asahi newspaper on June 6, up from 51 percent a month earlier.

National elections must be held by August 2013. None of Japan’s previous five premiers served much more than a year.

The nation’s biggest business lobby had warned power outages would lead to factory shutdowns at companies including Sharp Corp. and Panasonic Corp., threatening an economic recovery in the cities of Osaka, Kyoto and Kobe.

Companies including Komatsu Ltd. and NEC Corp. have said the nuclear restarts are needed to avert power shortages. Both Komatsu Chairman Masahiro Sakane and NEC Chairman Kaoru Yano have talked about moving their production overseas if there is insufficient power for their factories.

Political Pressure

The decision to restart the Ohi reactors was “supportive of the financial profile of the utilities sector in Japan” because it showed that authorities were beginning to develop a long-term approach to regulating the power industry, Moody’s Japan K.K. said today in an e-mailed statement.

The move was insufficient to restore Kansai Electric’s profitability or change its rating outlook because of remaining uncertainties, such as how long reactors will be allowed to operate, Moody’s said.

Noda’s “under intense political pressure from the banks and the utilities” who want reactors restarted, said Andrew DeWit, a professor at Tokyo’s Rikkyo University who focuses on energy policy. “They want to get those income streams back in operation.”

Stress Tests

Once the world’s biggest nuclear power generator after the U.S. and France, Japan shut its last operating reactor on May 5. Kansai Electric said it aims to restart the Ohi No. 3 reactor in early July, and the No. 4 unit as early as mid-July.

Japan’s utilities are running stress tests to assess whether reactors can withstand the earthquake and tsunami damaged that caused the meltdowns at Fukushima. Utilities have submitted reports on the first phase of testing on 22 reactors, according to the Nuclear and Industrial Safety Agency website.

Further restarts will probably be delayed until after Japan’s winter season, as a new regulatory panel will have to review stress-test results, the Nikkei newspaper said yesterday. Reactors at Hokkaido Electric Power Co.’s Tomari plant, Kyushu Electric Power Co.’s Sendai plant, Shikoku Electric Power Co.’s Ikata facility and Hokuriku Electric Power Co.’s Shika plant are likely the next to return to operation, the paper said.

Summer Demand

With summer approaching, the government set power-saving targets in areas supplied by seven of 10 regional utilities, including Kansai Electric, which is most dependent on nuclear power. Homes and companies supplied by Kansai Electric should cut consumption by more than 15 percent from 2010 levels on weekdays July 2 through Sept. 7, the government said on May 18.

“The conservation target will change only after we are certain of the electricity supply from the plant,” Trade and Industry Minister Yukio Edano told reporters in Tokyo after the June 16 decision. “We only decided to restart the plant, and that doesn’t guarantee it can supply power.

To contact the reporters on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editors responsible for this story: Teo Chian Wei at cwteo@bloomberg.net; Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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