Tepco Must Go, But What Comes Next?

By Kennedy Maize

Washington, D.C., September 9, 2013 – As continuing revelations of lying and incompetence at Tokyo Electric Power Co. have piled up in the wake of the Fukushima nuclear meltdowns of early 2011, an inescapable question arises: Can Japan’s largest utility survive. The educated guess here is that Tokyo Electric Power Co. is toast.

But whether that will make a difference in how the Japanese recover from one of the worst nuclear power disasters in history is not clear. There is every reason to believe that the government of Japan is as clueless and feckless as Tepco when it comes to understanding and dealing with the Fukushima catastrophe.

The Japanese government has stepped in (probably belatedly) to take over the fraught task of dealing with the still-uncontrolled aftermath of the March 2011 earthquake and tsunami that destroyed the nuclear station. The latest problems have been well-publicized, including groundwater flowing freely underneath the damaged reactors that are reeking radioactivity, leaks from water storage tanks hastily erected to store the water, and unexpected and unexplained fatal levels of radioactivity associated with the tanks and their plumbing.

What to do? Nobody in Japan appears to have clue, starting with Tepco. The utility’s ineptitude in even acknowledging and explaining the problem of water flowing through the damaged and radioactive debris in August led the government to intervene, brining deep financial pockets to the problem.

But it isn’t clear that money is the solution to problems the technologists don’t appear to understand. The government doesn’t inspire confidence that it has a better handle on the problems than Tepco, which is a terrifying indictment of the state of nuclear regulation in Japan.

Reflecting desperation, Tepco’s shareholders last June voted overwhelmingly for a plan for a partial nationalization of the company. Tepco chairman Tsunehisa Katsumata said that nationalization represents “the best way forward” for the company, which faces insolvency in the face of a cleanup project that could exceed $100 billion and decades of work.

But the tasks may be beyond the ability of the government to conquer, suggesting that nationalization may be a case of too much, too late. It may not work, but may saddle the Japanese economy with an asset unable to perform to the benefit of its new owners, the people of Japan.

Facing the uncontrolled water and unknown sources of radiation, the government, the Wall Street Journal reported,  has cooked up a plan to try to stop the flow of water across and through the site. The government’s scheme – an ice dam to be created between the plant site and the ocean – strikes more than a few observers as ludicrous. If it fails, what will critics call the ice dam disaster? Another meltdown, for sure.

The prospect of the Japanese government taking over – either by an outright nationalization of Tepco or some slight-of-hand transaction – isn’t reassuring. Japan has shown – and the ice dam fantasy is just the latest example – that the government is not discernibly more competent than Tepco in managing the continuing Fukushima crisis.

What to do? Beats me. On a recent radio show, David Sanger of the New York Times, who lived in Japan for six years and has participated in the coverage of the Fukushima fiasco, made a perceptive comment on Japanese culture and government. Sanger said that Japan was very good at day-to-day management of events. But, he said, noting that he was not surprised at the mess the country has made of the Fukushima meltdown, the country is not good at crisis management.

There seems to be little doubt that Tepco has botched the Fukushima challenge to the point where the company no longer has any rationale to continue to exist. On the other hand, it’s not obvious that turning over the operation of the utility to the government is a solution. In the U.S., we have often seen that, when it comes to managing nuclear power, government-owned power systems have performance records indistinguishable at best from their private-sector competitors.

So, returning to Japan, it’s clear that Tepco must go. What happens after that?