Saturday, September 6, 2014

Reality-Based Electric Power Policy

One of the fictions supporting the Japanese utilities was the idea that some of them might restart ALL their nuclear reactors, other than the TEPCO reactors at Fukushima Dai-ichi and Dai-ni complexes.  In fact, the restart effort has dragged on.   Three and a half years after the Fukushima disaster, NONE of the reactors are operating, even though the DPJ begrudgingly promoted plans for a limited restart, and the LDP/Abe Administration has actively promoted the restarts since it regained power almost two years ago.

The two Sendai reactors in Kyushu are essentially cleared to restart by the NRA, but even that has not happened yet, months after initial timelines would have predicted.

Of course, it has been widely known that a large number of reactors can never meet the new NRA safety standards, many because they are just plain old -- old design, old equipment.  Thus, out of 55 reactors operating (sometimes) pre-Fukushima disaster, at best 15-20 are plausible candidates to restart.

But the utilities cannot afford the financial hit they would incur if they were to admit that the assets are impaired.  In response, Japanese accounting rules were changed in 2013  to permit asset impairments from reactor closings to be spread over a number of years (and included in the utility rate-base).  Even so, the economic impact on the utilities will be an ongoing drain they can ill-afford.

It was reported on September 5, 2014 that the government has asked utilities to consider decommissioning plans for reactors that entered service before 1970 -- and thus will reach the end of their 40-year license term within the next 5 years.  It is unlikely that these reactors will ever meet the NRA standards for a license extension.  As seen in the chart published by Nikkei in its version of the story, there are 12 of these pre-1970 reactors (excluding Fukushima Dai-ichi).

It seems that getting the utilities to acknowledge some of the reactors that will never restart is part of the campaign to try to win some degree of public acceptance that others will restart.  Makes sense. Why would the public accept restart of the reactors that might actually clear the NRA's new safety standards, if the utility is taking the view that next year it will apply for restart of all its reactors, if the utility always challenges the NRA conclusion that an earthquake fault under a reactor is "active", that safety equipment is inadequate, etc., or if the utility says it will spend trillions of yen to retrofit an aging reactor.

According to the press reports, the utilities will get to make their own decisions on whether or not to go ahead with decommissioning, but Kansai Electric has already said it will "study" decommissioning its Mihama 1 and 2 plants, which are 42/43 years old.  Kansai Electric, in particular, has 7 of the old reactors.

Japan Atomic Power (Nihon Gen Den) has two reactors on the list, Tokai #2 and Tsuruga #1.  But its Tsuruga #2 plant also is built on an earthquake fault (according to the NRA expert panel).  If these are all decommissioned, the company will have no remaining business and need to be liquidated.  90% of its shares are held by the utilities, and of course any value must be written off, plus additional funds provided over many years to support a decommissioning effort.

TEPCO also had a number of older reactors, but they were located at the Fukushima Dai-ichi plant. Fukushima Dai-ichi's 6 reactors are now the object of a major clean up effort after the 2011 disaster, and Dai-ni's 4 units (all dating to the 1980s) will never be restarted.  TEPCO's other seven nuclear units are in Niigata at Kashiwazaki-Kariwa, which suffered damage in a 2007 earthquake.  While TEPCO has initiated the application process to restart units 6 and 7, and adding filtered vents, building huge, expanded anti-tsunami seawalls and doing other retrofits to try to clear the NRA standards, it is not clear whether these actions will be sufficient, or whether inherent geologic features (earthquake faults) and political opposition will be overcome.  In any event, the prospects for restart of units 1 to 5 seem remote.

So if one assumes that 15 out of TEPCO's 17 units will never restart, adds the 12 units in Nikkei's chart, that already eliminates half of Japan's pre-2011 nuclear reactors.

How much will it cost to decommission these reactors?  How long will it take?  A lot, and a long time.

UPDATE November 17 2014:  It was reported on November 13 that Kansai Electric is considering a filing with the Japan NRC for the "special inspection" required to restart its Takahama 1 & 2 reactors and extend their lives beyond 40 years.  The current ages are 38 and 39 years, respectively.

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