News Article

Tepco weak points in Tokyo revealed after Typhoon blackouts

Tepco still in crisis after Fukushima

After one of Japan’s most powerful typhoons in recent memories, Eiichi Ubukata was shocked.

In his hospital in Chiba, just east of Tokyo, the 61-year-old doctor finds the door blocked by down power lines. On September 9 Typhoon Faxai blown off the roofs and brought down communications cables, leaving 900,000 homes powerless.

But what left Ubukata–and others in the city–disappointed and upset was not only the magnitude of the damage caused by the typhoon, but also Tokyo Electric Power Co. Tepco, as the public company is known, could soon be in the path of the storm again, as Super Typhoon Hagibis reached the Tokyo region this weekend.

Tepco sent thousands of workers, including those from other power companies, to Chiba after the typhoon of Sept. 9 to tackle its effects. Their presence did no harm, according to Ubukata.

“There were so many of them, but they were just waiting, not doing their work,” he said. As he demanded that the power poles block his clinic be removed, he told him that they could do anything “couldn’t do anything without orders from Tepco.” And while Tepco has over 300 power supply vehicles, which can be attached to distribution lines to supply power to buildings directly, only about 100 have been operational since September 16, one week after the storm hit. Elsewhere, people got ill as temperatures reached 30 C, and hospitals had to work on small back-up power supplies.

In contrast to the public outrage, contradictory messages. The day after Typhoon Faxia struck, Tepco said that by the next day, he would attempt to restore electricity completely. Three days later, it said two weeks would take a complete recovery. It was suspected that Tepco–in which the government is responsible–was forced to reveal and convince the public that it was responding quickly.

Weather preparedness and how to better respond to natural disasters can only become more critical as global warming increases the likelihood of significant typhoons. At the beginning of the summer typhoon season, Japan will host the Olympics next year. And this year, Typhoon Hagibis forced for the first time in rugby history the cancellation of matches.

Sadly, Tepco was already here in far more tragic circumstances.

In 2011 a massive earthquake and tsunami triggered the nuclear plant’s crash in Fukushima, which caused Japan’s worst nuclear disaster after the war. The organisation was blamed for a bungling administrative crisis response such as incomplete or unreliable records, apparent interaction confusions within the business and lack of adequate preparedness for disasters.

But the recent tragedy in Chiba raised questions about what the organisation has learned from Fukushima and its plans for the next Olympic Games, which are expected to attract ten million visitors to Japan.

Indeed, Tepco has been struck by the Fukushima disaster in a financial crisis that has led to a government bailout, which in turn could have changed how it is treated.

The corporation also pays the survivors damages as well as the cost of decommissioning and decontamination of its nuclear facilities. In total, these expenses are calculated at 22 trillion yen, of which the company has to pay 16 trillion. The latest Tokyo District Court decision exonerating for failure to prevent a catastrophe three former Tepco managers of professional misconduct does not modify the company’s financial obligations.

In 2012, the Japanese government took action by effectively placing Tepco under state control to save Tepco from insolvency. While the corporation remains on the list, Tepco owns 50.1 per cent of the voting rights in state-funded Nuclear Damage Compensation and Decommissioning Facilitation Corp.

The NDF has transformed Tepco by breaking up its operations, reducing its costs and opening the firm to competition to reduce the burden on taxpayers and utility customers.

Japanese utilities had historically had regional monopolies, but the government liberalised the electricity market at the retail level in 2016. Tepco was eventually turned into a holding company, and its activities were split into three distinct businesses: wholesale, power generation, transmission and distribution.

The split hampered investment in power transport infrastructure and distribution infrastructure which could have exacerbated the impact of the typhoon in Chiba, where most of the equipment in operation were built in the 1970s according to Takeshi Kaneda, president of the consultancy Universal Energy Research Institute.

As a result of the division of Tepco into three companies, Kaneda claimed that “transmission and distribution, which should spend the most money, is not profitable[ enough],” as the company had limited growth avenues.

To order to meet its Fukushima-related costs, Tepco has tried to reduce costs to Tepco Power Grid, its transmission and distribution branch. Hajime Miyazawa, the principal at the Mizuho Research Institute, said this was the “most significant source of profit.

Generation of electricity requires investment and must be adjusted to fuel price fluctuations, while retail companies are unlikely to expand rapidly despite Japan’s population decrease and the increased market liberalisation competitiveness.

To order to pay for its commitments related to Fukushima, Tepco needs to earn 450 billion yen to net annual income, which almost doubles the 232.4 billion it received in the fiscal year ending in March. Miyazawa says that more business consolidations would be undertaken to reduce costs. Tepco has already collaborated with Chubu Electric Power Co., which primarily operates in the Chubu area west of Tokyo, for companies in thermal power generation.

According to Miyazawa, the government-supported Tepco reform has created “healthy competition among private companies,” and created a significant change from the pre-2011 monopolies. Instead, he added that Tepco is not an “ordinary listed company that can make decisions for the investors,” particularly when it comes to nuclear installations. It has no choice but to “to comply with government decisions,” he said.

Tepco is counting on the restart of its nuclear power plants to bring in much-needed revenue. After the Fukushima disaster, all reactors in Japan are halted temporarily or permanently due to safety concerns.

Tepco operates a nuclear power plant in Niigata Prefecture in Kashiwazaki-Kariwa and one in the prefecture of Aomori, which was under construction until 2011. The Company does not intend to restart all seven reactors in Kashiwazaki-Kariwa, but it aims to generate approximately 100 billion yen in income annually every time the reactors go online.

The company initially thought it could restart the project in Kashiwazaki-Karita in 2013 but had a hard time persuading the local government and the people of their reputation and security.

“TEPCO didn’t take ownership of the Fukushima disaster, saying it was unforeseen,” a letter to a local mayor of Kashiwazaki a few years ago said. “Don’t leave us people to die.” said the reactors No. 6 and No. 7 in 2017, which met security requirements, but they remain uncertain about how to restart.

A recent scandal involving Kansai Electric Power Co., another nuclear power provider, will not help the recovery of public confidence. Immediately after Chiba’s typhoon, the chairman and other executives of Kansai Electric received money from a former local official in the town hosting a nuclear power station. The President announced that he would withdraw from the scandal.

The headaches of Tepco don’t end there. Government officials stress again the need to dig underground electric cables. Burying cables can cost ten times the cost of installation over the ground and investment in the latter approach is typically shared between parties, including the government, telecommunications and utilities.

Masakazu Kato, professor of engineering at the University of Tokyo Denki, said that this would be an efficient way of countering the impacts of typhoons, snow, lightning and earthquakes outside of reclaimed, liquefaction-prone areas.

According to the transport department, only about 5 per cent of utility poles in Tokyo is underground. Because of Japan’s narrow roads and laws that forbid the blocking of roads during the day, major construction projects were challenging, Kaneda said.

When Nikkei Asian Review asked Tepco what move it was taking to prepare for natural disasters, it did not mention underground facilities. “For electrical poles and transmission-transformation facilities, we are conducting appropriate replacements based on checkup findings,” it said in a statement. The company was cautious about their response to the recent typhoon, saying only: “first, we need to assess the size and condition of the damaged facilities.” However, Kato is confident that the power infrastructure of Tokyo will be prepared for the next year’s Olympics. He said the bulk of power transmission and transformers for large and condominium buildings are underground.

In other ways, Tepco also has its defenders. The company has been criticised for its decisions and interaction during the crisis with other players, but Yoh Yasuda, Project Professor of Renewable Energy Economics at Kyoto University, notes that governments must share the blame.

“The decision-making position should be taken by the prefectural government, the national government or both,” said Yoh. He added that given these circumstances, Tepco’s response to typhoon was all that could be predicted. “It would be quite difficult for a private company facing considerable uncertainty due to a lack of information to make these decisions on its own.”

“More organised training will be required” in the lead-up to the Olympics, Yoh said. He indicated that organised activities such as the removal of falling trees, food supplies and safe evacuation shelters were necessary.

“Irrelevant criticism of utilities can end up turning them into a scapegoat that distracts public attention away from important matters like investigating causes and preventing a recurrence,” he said.

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