[ RadSafe ] Chubu Electric Bites The Bullet With Nuclear Shutdown

[Perle, Sandy]

With the serious power shortages in Japan, it seems like a foolish knee-jerk reaction for the government to be "causing" other operating nuclear plants to shutdown.

Chubu Electric Bites The Bullet With Nuclear Shutdown

NAGOYA (Nikkei)--Chubu Electric Power Co. will move quickly to fire up an idle fossil-fuel power unit to take up the slack created by its nuclear shutdown, a decision that President Akihisa Mizuno acknowledges could lead to a net loss this fiscal year.

The central Japan utility will also have to explain to shareholders why it agreed Monday to Prime Minister Naoto Kan's nonbinding request to halt its Hamaoka nuclear power station in Shizuoka Prefecture.

Speaking at a news conference, Mizuno said the company will avoid placing an "undue burden" on customers, shareholders and residents. The decision to take Hamaoka offline came just three days after Kan called for stronger tsunami safety measures at the plant.

To maintain a stable electricity supply, the company will first secure about 1.2 million kilowatts of capacity by restarting the No. 3 unit at its Taketoyo thermal power plant in Aichi Prefecture and stopping its power supply to Tokyo Electric Power Co. (9501)<http://e.nikkei.com/e/app/ac/market/companyoverview.aspx?scode=9501>, among other steps. It will restart more thermal generators if necessary. There are no plans at this point to raise electric rates, the company stressed.

Substituting fossil-fuel power for nuclear will cost Chubu Electric an additional roughly 700 million yen a day. The company withdrew its fiscal 2011 earnings forecast and announced that it is reconsidering a plan to retire 20 million shares in fiscal 2011-14, although it said it would maintain its 60 yen a share annual dividend.

Asked how investors should take the news, Mizuno said that ensuring nuclear power safety will lead to profit "in the long run."

Mizuno said Chubu Electric had received assurances it would be able to restart the Hamaoka plant once it takes medium- to long-term tsunami and earthquake precautions. The company had scheduled two to three years for such steps, which include building a seawall. The work will proceed "as quickly as possible," Mizuno added.

Chubu Electric powers a region crammed with factories run by Toyota Motor Corp. (<http://e.nikkei.com/e/app/ac/market/companyoverview.aspx?scode=7203>and other big-name manufacturers. Industrial customers accounted for 48% of its electricity sales in fiscal 2010, about 10 percentage points higher than the average for all electric utilities. Troubles with Chubu Electric's power supply would thus hit domestic manufacturing head on.

Toyota will "do everything possible to cooperate in conserving energy," a spokesperson said, adding that the automaker still does not know what effect the Hamaoka shutdown will have on its business. Toyota is operating at about 50% capacity as it struggles with the aftereffects of the March 11 disaster. It is already planning energy-saving steps for the summer and is expected to use less electricity than in typical years.

The business world had harsh words for the Democratic Party of Japan-led government's abrupt call for shutting down Hamaoka. At a news conference, Japan Business Federation Chairman Hiromasa Yonekura described the thinking leading up to the decision as a "black box" and said the government owes the public an explanation of the grounds for the decision.

"When the government is this irresponsible, it has an effect on the ethics of what goes on inside companies," said Yonekura, who leads the business lobby also known as Nippon Keidanren.

With the outlook uncertain for restarting nuclear reactors undergoing periodic inspections, there could be "nationwide power shortages," warned Makoto Yagi, chairman of the Federation of Electric Power Companies of Japan and president of Kansai Electric Power Co.

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Sander C. Perle
President
Mirion Technologies
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