Japan Proposes Tepco Aid Package, With Fight Likely

By MITSURU OBE

TOKYO—The Japanese government proposed creating a financial safety net for beleaguered Tokyo Electric Power Co. to help it pay claims that could total more than $100 billion stemming from its damaged nuclear power plant—a proposal that drew support from investors but could face tough odds in Japan's deadlocked parliament.

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Reuters

Japan's Prime Minister Naoto Kan used a fan while attending a legislative committee on Japan's reconstruction efforts Tuesday.

If it passes, the plan could keep the company—known as Tepco—from insolvency while sparing its lenders a painful restructuring. But in a shift, it also opens the door for higher electricity bills for consumers and businesses, in addition to contributions from the Japanese power and nuclear industries and backing from the Japanese government. Previously, government officials had appeared to rule out any rate increases to finance the rescue.
The government's plan didn't offer details on how much each would bear, suggesting fights over the final structure lie ahead. "The government will make sure that any costs passed on to consumers will be kept to a minimum," Minister of Economy, Trade and Industry Banri Kaieda said at a briefing.
Tepco shares soared on the news, climbing the 25% limit allowed for a single day, to close at ¥249 (about $3.11) in a strong rebound from a recent descent to an all-time low of ¥148 hit Friday. Tepco bonds, which have seen little trading due to their uncertain future, also rose strongly.
But the chairman of the Federation of Electric Power Companies of Japan gave a more guarded reaction, saying the utility lobby wants to see stronger justification for payments by other utilities to help finance the compensation payments. He said the group hopes its demands will be better reflected in parliamentary deliberations.
The main opposition party, the Liberal Democrats, also said it isn't necessarily in favor. Support from the opposition would be needed to ensure passage of the bill, but other legislation—including bills to help fund rebuilding after the devastating earthquake and tsunami that struck Japan on March 11 —has stalled as opposition lawmakers press for the ouster of unpopular Prime Minister Naoto Kan.
"It's a problematic scheme that demands payments from other power companies that aren't at fault, and holds [Tepco] accountable for limitless compensation," said Nobuteru Ishihara, LDP secretary general.
Under the plan, the government will create a special body to handle the claims, which estimated have put at up to ¥10 trillion, or $124 billion. It will have the authority to issue government-backed bonds and will repay the funds using future profits from Tepco, contributions from industry and potentially higher power bills. The government also said that it will stand behind the company if necessary and that it isn't considering bankruptcy.
The government said in a statement that it "has asked Tepco to seek cooperation from all stakeholders," which it said included shareholders, bondholders and lending banks. But it added that a decision on what constituted "cooperation" would be left to the new government body.
"It is not for the government to decide specific forms of cooperation between Tepco and the stakeholders," Shinsuke Kitagawa, head of a task force on nuclear damages compensation, said at a briefing.
Investors were reassured that the government's plan wouldn't mandate a wholesale restructuring of Tepco's loans or bonds. "We view this establishment of the framework as major progress. The scheme will allow Tepco to fulfill its responsibility to pay compensation costs without going bankrupt, which implies that bonds will avert a default," said Toshiyasu Ohashi, chief credit analyst at Daiwa Securities Capital Markets Co.
Analysts said that restrictions imposed Tuesday on the short-selling of Tepco shares also played a role in the sharp share price rise.
Tepco has already warned that it faces a dire financial future as it tries to cope with the cleanup from the disaster at the Fukushima Daiichi plant, which was heavily damaged by the March 11 earthquake and tsunami. It is also struggling to fill in large gaps in its generating capacity. Even after it brought on mothballed facilities, Tepco is expecting a shortfall of 10% over usual summer demand.
Tepco President Masataka Shimizu said that the utility is preparing for making compensation as quickly as possible, slightly more than three months after the quake and tsunami. "We hope the bill will be enacted as soon as possible," he said.
The legislation is based on a framework initially announced on May 13 as the government grappled with how to meet the multiple interests of those hit by the accident, the utilities customers, and the company's shareholders, bondholders and lenders.
An independent panel of outside experts that is scrutinizing Tepco's finances will meanwhile hold its first meeting Thursday. Mr. Kaieda said the panel will ensure Tepco sells assets and implement tough cost-cutting before seeking any public support.
—Judy Lam and Kana Inagaki contributed to this article.

Japan cabinet approves Fukushima nuclear compensation

Cabinet agrees estimated $100bn-plus payout package after reactor meltdown but political manoeuvring could delay payments

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• Justin McCurry in Tokyo
• guardian.co.uk, Tuesday 14 June 2011 08.32 BST
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Fukushima nuclear disaster: Trucks drive past piles of rubble collected after the tsunami and nuclear disaster. Photograph: Kiyoshi Ota/Getty Images
Japan's government has approved a plan to help the owners of the stricken Fukushima Daiichi nuclear plant provide trillions of yen in compensation, but political manoeuvring could delay payments to tens of thousands of victims of the country's nuclear crisis. The cabinet's approval of the scheme on Tuesday came after the plant's operator, Tokyo Electric Power [Tepco], said a further six workers had exceeded the annual legal dose of radiation, underlining the risks they face as they struggle to stabilise overheating nuclear reactors by early next year. Shares in Tepco rose dramatically after the compensation scheme was approved, but anger is mounting at the slow progress made in paying families and businesses more than three months after the worst nuclear accident since Chernobyl. Under the bill, the government would set up a fund and issue special bonds to enable Tepco to pay compensation that the Mainichi newspaper said could reach US$124bn (£75bn). Other power utilities would be asked to contribute to the fund, and Tepco is expected to repay the full sum over an, as yet, unspecified number of years. In return for state help, Tepco will have to cut costs and turn its management over to the government "for a certain period of time". Tepco, whose share price has fallen 90% since the 11 March tsunami crippled the Fukushima Daiichi plant, promised to make repayments as quickly as possible. "We hope that the proposed bill will be enacted in parliament as soon as possible," it said in a statement. The measure's fate is far from certain, however. Some government and opposition MPs oppose the use of public funds to help Tepco, and the prime minister, Naoto Kan, is still under pressure to resign immediately despite surviving a recent no-confidence motion by promising to step down once the crisis is under control. The current parliamentary session is due to end on 22 June, but the Kan administration is pushing to extend it in the hope of passing the compensation package, as well as an emergency budget to fund post-tsunami reconstruction. News that the bill had gained cabinet approval lifted investor confidence in Tepco, but concern persists that the company will look to consumers to help fund damages claims in the form of higher electricity bills. The trade and industry minister, Banri Kaieda, denied media reports that the government had already approved a 16% increase in electricity charges from next April. "The government will make sure that any costs passed on to consumers will be kept to a minimum," he said. Tepco and two other power utilities are coming under pressure to end their involvement in nuclear power, with groups of investors expected to raise the issue at shareholders meetings at the end of the month. The risks facing the thousands of workers who have taken part in the operation to stabilise Fukushima Daiichi were underlined when Tepco said six more were feared to have exceeded the legal limit of 250 millisieverts [mSv] a year, bringing the total to eight. The limit was raised from 100mSv a year early in the crisis to allow workers to spend more time at the plant, where nuclear fuel in three reactors suffered meltdowns. In the worst cases, two control room workers were exposed to well over twice the legal limit, Tepco said, as it released preliminary results of radiation tests on almost 2,400 workers who were based at the plant in March, when radiation levels were at their highest. The health ministry also said on Monday that at least 90 others have exceeded the original limit of 100mSv, including several who are nearing the 250mSv level. Experts believe that exposure to more than 250mSv increases the chances of a person developing cancer in their lifetime by 1%. Hidehiko Nishiyama, a spokesman for Japan's nuclear and safety agency, described the findings as "extremely regrettable". Tepco said none of those affected have showed signs of ill health, but added that they would need long-term monitoring.

Italy referendums deal blow to Berlusconi

Australian Broadcasting Corporation

Broadcast: 14/06/2011

Reporter: Emma Alberici

Italians have turned their backs to president Silvio Berlusconi by voting against government plans at three referendums.

Transcript

ALI MOORE, PRESENTER: Results in the Italian referendums held over the weekend have struck a blow to Silvio Berlusconi's government.

Voters have overwhelmingly decided against nuclear energy, they don't want to privatise the country's water utilities and they also made it clear that government ministers should not be immune from prosecution.

Europe correspondent, Emma Alberici.

EMMA ALBERICI, REPORTER: Those who turned up to celebrate on the streets of Rome cheered as much for their success at the polls as they did for their chance to send a message to their prime minister.

JAMES WALSTON, AMERICAN UNIVERSITY OF ROME: Berlusconi is clearly out of favour with the majority of Italians, for one reason or another. He has tried so far to deal with his lack of support in the local elections, and now in the referendums, by ignoring the signs. He pretends that everything is alright.

EMMA ALBERICI: These were not compulsory elections and the Italian government spent $400 million trying to convince voters to stay away from the ballot box. Without a 50 per cent turnout, the referendum would not have been valid.

But not only did an overwhelming majority of Italians show up, 94 per cent of them voted yes to scrap Mr Berlusconi's plan to reintroduce nuclear power, which was abandoned in 1987 after the Chernobyl disaster.

In a country that's prone to earthquakes, Fukushima looms large.

SALVATORE BARBERA, GREENPEACE ITALY: 22 million and a half Italian people said 'Si'. Si means 'I don't want nuclear in this country' and this means that the only possibility is to go to renewable. Germany, Japan, Switzerland, now Italy.

EMMA ALBERICI: The prime minister had hoped that Italy would meet 25 per cent of its electricity needs with nuclear energy by 2030. Now it will need to rely more heavily on the renewable sector which already makes up 22 per cent of the country's power supplies.

SILVIO BERLUSCONI, ITALIAN PRIME MINISTER (TRANSLATION): Due to the decision that the Italian people are taking right now with the referendum, we will have to say goodbye to nuclear power plants. So now we will have to commit to the renewable sector.

EMMA ALBERICI: As counting ends in the three referenda it's clear the voters also said no to placing their prime minister and his cabinet above the law by allowing them to avoid court cases against them by claiming to be too busy to attend proceedings.

Italians rejected, too, Mr Berlusconi's proposal to privatise the state's water assets.

JAMES WALSTON: He's been the centre of Italian politics for 17 years, any vote that the Italians have taken over the last 17 years has in some way been a vote on Berlusconi and this one is no exception.

EMMA ALBERICI: The setback for the government comes just weeks after defeat for the ruling party in local elections. Mr Berlusconi's party lost control in important cities like Milan and Naples, but this time his coalition partner, the far right Northern League, also suffered heavy losses.

A general election isn't due to be held in Italy until 2013.

Emma Alberici, Lateline.

Italians Vote to Abandon Nuclear Energy

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By GIADA ZAMPANO And NATHANIA ZEVI

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Zuma Press

Silvio Berlusconi in Rome on Monday.

ROME—Italians voted to abandon nuclear power for the foreseeable future, turning out in droves to cast ballots in a packet of referenda whose outcome is a sign of growing popular discontent toward Prime Minister Silvio Berlusconi's conservative government.
Mr. Berlusconi's administration had in past weeks urged people not to vote in the four referenda, which were organized by center-left opposition parties and which asked voters whether they wanted to overturn government laws on reviving nuclear energy, privatizing Italy's water supply and giving top government officials partial immunity from prosecution.
Instead, 57% of Italians went to the polls—a number well above the 50% of the voting population needed to make a referendum valid, a threshold last reached in 1995. More than 95% of those who cast their ballots voted "yes" in each referendum, overturning the four laws in question.
"This was a vote against nuclear energy. But by urging people not to go to the polls, Berlusconi turned this into a vote against himself," said Giovanni Sartori, professor emeritus of political science at the University of Florence.
Mr. Berlusconi had made restarting nuclear energy in Italy one of his government's priorities. The immunity law also had been one of the government's key planks. The law allows the prime minister and other top officials not to show up in court for criminal trials, if busy governing schedules are cited. Critics, however, have long characterized the law as a tailor-made measure aimed at shielding Mr. Berlusconi from the four criminal trials he is currently facing.
On Monday, the prime minister acknowledged the defeat.
"On each theme, Italians have made their position clear. The government and Parliament will now have to take into account this result," Mr. Berlusconi's office said in a statement.
Monday's outcome is notable not just for the lopsided vote but also because it comes just weeks after Mr. Berlusconi's conservative coalition was badly defeated in local elections. Though the premier still has the majority in Parliament he needs to govern, his popularity has been falling in recent months.
Italy's center-left opposition parties, which had widely campaigned for people to vote, were jubilant. Opposition leader Pierluigi Bersani hailed the result as a crucial sign of the need for political change and called for Mr. Berlusconi's government to resign.
"This referendum marks a divorce between the Italians and the government. At this point, the government has to leave and lead to new elections," Mr. Bersani told a news conference.
Conservative government officials tried to play down the political meaning of the vote. "The fact that the referenda reached the quorum doesn't change anything for the government," said Ignazio La Russa, Italy's Defense Minister and a strong Berlusconi supporter.
Italy's chronically feeble economy, however, is weighing heavily on young people in particular, and many here are fed up with the premier's legal woes, including most recently his trial on charges of paying for sex with an underage woman and abusing his power to cover it up—charges the premier denies.
The Northern League, Mr. Berlusconi's party's most important ally in Parliament, also is getting fed up. "Two weeks ago, we got a first slap in the face in local elections. Now the referendum has dealt us a second slap in the face," said Roberto Calderoli, Italy's minister for legislative simplification and a key Northern League official.
Italy abandoned nuclear energy in 1987—shortly after the Chernobyl nuclear accident—by voting against it in a referendum similar to Monday's. In the current vote, the Fukushima Daiichi nuclear crisis in Japan drew people to the polls. As in other European countries, Italy earlier this year imposed a moratorium on its nuclear plans, but Mr. Berlusconi's government was hoping to resurrect them longer term by building several plants across the country. Early on Monday, as the results were coming in, Mr. Berlusconi said that without the possibility of nuclear plants, Italy would have to "strongly commit" to renewable energy.
Many others pushed for a nuclear revival in the country. "Italy will spend a lot of money for energy needs" without nuclear energy, said Chicco Testa, head of Italy's Nuclear Forum and former chairman of Italian utility Enel SpA. Mr. Testa was one of the main backers of the 1987 referendum against nuclear power, but has since changed his stance: "There is plenty of gas out there and coal, but I don't know what the prices will be in 10 years' time as they are tied to oil. Based on past experience, I see higher oil prices."
The two water-related referenda asked Italians to vote on whether to overturn the government's plans to privatize water utilities. The government has argued that handing over water management to private entities would make it more efficient. Critics argued successfully that it would lead to higher prices.
Write to Giada Zampano at giada.zampano@dowjones.com

No to nuclear and no to Berlusconi

Comments (12)

Anti-nuclear protesters erected this giant mock nuclear waste barrel in Rome

In the past two days the people of Italy have been given their say.
They have convincingly rejected nuclear power and they have delivered another humiliating defeat to Italian Prime Minister Silvio Berlusconi.
The disaster at the Fukushima nuclear power plant in Japan is changing Europe's energy future. Increasingly it looks as if it may become a continent without nuclear power.
The French have bet heavily on the nuclear industry providing clean energy. Given the chance, Europe's citizens are saying "no way".
Eyes on France On 30 May, Germany, Europe's economic powerhouse, decided to phase out atomic power between 2015 and 2022. Switzerland looks set to follow. It is examining a proposal to phase out the country's nuclear plants by 2034.

“Start Quote

[The Italian vote] could open a serious phase of reflection in other [EU] member states”

Daniel Cohn-Bendit Green leader, European Parliament

Now Italy will not revive its nuclear industry. The people have spoken and spoken convincingly.
Silvio Berlusconi had urged his supporters to boycott the polls, hoping that the turnout would not reach the necessary threshold of 50%.
In the end, 56% of voters took part and afterwards the prime minister conceded: "We will have to commit strongly to the renewable energy sector."
The leader of the Greens in the European Parliament, Daniel Cohn-Bendit, said this vote "could open a serious phase of reflection in other member states".
If Europe moves away from nuclear power, a question arises as to whether it can fill the gap with renewable energy. Will the mood in France change and will they, too, get a chance to vote?
Evaporating magic

Silvio Berlusconi looks more and more isolated

There was a second plot to the vote in Italy: Silvio Berlusconi himself. Last month, in elections he made about himself and his authority, his candidates were badly beaten. Now he has suffered a serious defeat on a number of referendum questions.
The public rejected plans to privatise the water system. Even the Vatican got involved, declaring that water was a human right and should not be subject to market forces.
Most significantly, the people rejected a change in the law that would have enabled the Italian leader and other high officials to avoid prosecution.
Berlusconi's appeal to the Italian electorate, which has long survived gaffes and scandals, is now ebbing away.
The magic has gone. That bond between Berlusconi and ordinary Italians seems to have snapped. Perhaps voters have become weary of a leader where so much of public debate is about his personal life and his political survival?
Pierluigi Bersani, leader of the main opposition Democratic Party, was calling on Mr Berlusconi to resign. "This referendum," he said, " was about the divorce between the government and the country."
Berlusconi still has a majority in parliament but it is dependent on the Northern League. They are now questioning whether their alliance with Berlusconi's party is damaging them. Some may decide it is time to break away.
Next week there were be a vote on confidence in the Italian parliament. It is not in Mr Berlusconi's character to step down but he is increasingly an isolated figure. He has a fragile majority in parliament but almost certainly not in the country.

Cabinet OKs Tepco redress bill

Other utilities must ante up to back huge outlays

Kyodo

The Cabinet approved a bill Tuesday to help Tokyo Electric Power Co. meet its massive compensation payments through the creation of an entity that would provide financial assistance to the utility strugging with the crisis at the Fukushima No. 1 nuclear plant.

Now that it has the administration's endorsement, the bill is expected to be submitted to the current Diet session. The administration is hoping to ensure swift payment of compensation that may total trillions of yen while maintaining a stable supply of electricity.

But the bill's fate is uncertain amid the political tug of war that pressured Prime Minister Naoto Kan into announcing he will resign in the near future. Some, including lawmakers of the Democratic Party of Japan, are also concerned that the compensation scheme may lead to a rise in electricity fees.

Under the bill, the new institution would be allocated a type of bond from the government that can be cashed when necessary and could receive loans from financial institutions so it can provide financial assistance to Tepco.

Based on the idea of mutual help, electricity firms that own nuclear plants would contribute to the entity.

Although the bill is intended to prepare for possible future nuclear accidents, its main purpose for now would be to help Tepco meet compensation demands and prevent the utility from being crushed by debt.

The nuclear emergency, triggered by the quake-tsunami disaster on March 11, has forced many residents around the plant in Fukushima Prefecture to evacuate their homes and has devastated the region's agriculture, livestock and fishing industries.

The DPJ-led administration at one point planned to delay submission of the bill to a later Diet session but has decided to present it during this session so victims can benefit more quickly.

It is also seeking early passage of the bill in the hope of allaying concerns among market players about Tepco's outlook, which have sent its shares tumbling on stock markets.

The DPJ is hoping to extend the current session beyond the scheduled end of June 22.

Disaster prep rethink

The government sees the need to rethink how it views the threat of future major earthquakes and their potential damage as well as measures local governments and people in harm's way may need to take, according to a report released Tuesday.

In the 2011 white paper for disaster prevention approved by the Cabinet, the government describes the March 11 quake and tsunami as a "disaster that exceeded the envisioned scenarios in disaster prevention measures taken thus far."

Summarizing the extent of damage and the central government's response to it, the annual report notes, "Improving the lives of victims, who are hanging tough under great stress, is the priority issue."

More than 15,000 people were killed and about 8,000 others remain missing in the quake and tsunami that devastated the northeast.

On future steps, the paper emphasizes the importance of coming up with broad-based measures to tackle the possible situation of three major earthquakes occurring simultaneously in regions ranging from eastern to southwestern Japan.

It says that tsunami observation systems should be reinforced while also taking into consideration unexpectedly vast damage they might cause, adding that evacuation drills should be held to prepare for tsunami and disaster facilities should be upgraded.

The document includes an outline of the nuclear crisis at the Fukushima No. 1 power plant but doesn't mention that three reactors suffered core meltdowns.