Monday, Nov. 26, 2012



Nov 26,2012

Municipalities hosting nuclear power plants throughout Japan have received large amounts of central government subsidies, donations from utilities and lucrative business contracts.


Now, 1½ years after the Fukushima nuclear disasters, those municipalities realize how much their finances depend on the nuclear power-induced money.

“They’re like drug addicts cut off from supplies,” said a member of the assembly of Niigata Prefecture, which hosts Tokyo Electric Power Co.‘s Kashiwazaki-Kariwa nuclear power plant on the Sea of Japan coast. All the reactors at the plant remain shut down after its No. 5 and 6 reactors went offline earlier this year.

After the Fukushima nuclear power plant meltdowns in March 2011, the government refused to give the go-ahead for restarting reactors at other plants throughout Japan that had gone offline for regular inspections, until it approved reactivating two reactors at Kansai Electric Power Co.’s Oi plant in Fukui Prefecture in July.

“I was scared to death when the Fukushima accident happened, but now I am thankful that the plant resumed operations,” said a resident of the town of Oi who works for a subcontractor to the power station. “I think that most of the local people here feel the same way.”

Many newspaper reporters and TV crew rushed to Oi — along with anti-nuclear power activists — when the town was at the center of nationwide attention over the government’s decision to reactivate the reactors. The man says he did not feel like talking to media crews, who he thought were trying to paint a stereotype picture of the local residents worried about the dangers of reactivating the plant.

There are indeed gaps among local residents and businesses on how they benefit financially from hosting the nuclear plants.

Host prefectures and municipalities receive central government grants based on laws designed to promote development of power generation facilities.

These subsidies are heavily distributed while siting research and construction are going on, but are gradually reduced once the plants starts operation. After that, only the local residents who work at the plant and related businesses continue to get the rewards.

“People who do not benefit from the plant are a minority here. Still, it’s true that some residents who don’t directly get the money were unhappy about the restart,” said an Oi town assemblyman.

Media reports played up the voices of residents who spoke up in opposition to the restart. But it was “never a consensus of the local residents” to oppose the plant restart, the assemblyman said.

People in other host municipalities have mixed feelings toward the restart of the Oi plant.

“A growing number of residents ask me when the plant here will be restarted,” says a politician from Tsuruga, Fukui Prefecture, where Japan Atomic Power Co. has a power station and Japan Atomic Energy Agency operates the Monju fast-breeder reactor, which constitutes the core of the nation’s nuclear fuel cycle policy.

A reporter with a local newspaper says “special financial consideration” has been given to the Tsugaru area as part of the effort to achieve the nuclear fuel cycle, which he called “a pie in the sky” to begin with. Money kept flowing in generously from the nuclear community even after Monju was kept mostly offline following a serious sodium coolant leak in 1995.

The city of Tsuruga has so far received a total of over ¥100 billion in “official” grants. In addition, another ¥10 billion has been provided to the city coffers in the name of “anonymous donations.”

Such funds are then used to benefit local businesses in the form of public works projects contracts. One construction industry insider in Fukui Prefecture explains that bid-rigging is still rampant in such projects in municipalities hosting nuclear plants, resulting in higher costs.

For example, the municipal government paid well in excess of ¥100 million for a road improvement project, but the sum would have been more than 20 percent less if the same work had been undertaken in other cities, he said.

There will be additional construction orders from a utility after a nuclear plant starts operations — at costs mostly above the industry average, according to a source familiar with the construction industry in the Kansai region. Some of the money will likely go from construction firms to local politicians, the source said.

Kansai Electric Power Co., which operates three nuclear power plants in Fukui Prefecture, is a private company and may not see a problem in paying whatever price is bid for its construction work. But under relevant laws, utilities are allowed to pass all of such costs on to electricity bills charged on consumers.

Even among host municipalities, there are differences in attitudes depending on the extent to which they rely on financial assistance and benefits linked to nuclear energy. In February, Kashiwazaki Mayor Hiroshi Aida expressed his support for a policy to reduce and eventually eliminate the nation’s dependence on nuclear energy, but his counterpart at Kariwa said his village cannot survive without the nuclear power station.

While they both host Tepco’s Kashiwazaki-Kariwa plant, nuclear plant-related subsidies or donations from the utility account for 14 percent of Kashiwazaki’s annual budget and as high as 30 percent of Kariwa’s.

An insider in the construction industry in Kashiwazaki says that local politicians and contractors continue to hunt for new sources of nuclear power-related income even after the Fukushima plant disasters. Even though it is now next to impossible to hope for construction of new nuclear plants, they are looking into the possibility of building facilities for temporary storage of spent nuclear fuel from nuclear power plants around the country, or a storage site for contaminated materials from Fukushima, he points out.

Another example of a local community dependent on money related to nuclear facilities is in Rokkasho, Aomori Prefecture, formerly a poverty-stricken village where most of its 11,000 residents relied on agriculture and fisheries for their livelihood. The village is now called one of Japan’s wealthiest municipalities.

Nippon Nuclear Fuel Ltd., which plays the central role in the nation’s nuclear fuel cycle project, has its headquarters in Rokkasho and accounts for ¥6 billion of the estimated ¥6.8 billion in local tax revenue for fiscal 2012. Rokkasho’s general account budget for the year is ¥13 billion — double the amount of a village in Kumamoto Prefecture with roughly the same population.

If the government’s plan to phase out nuclear power in Japan is to be implemented, the whole concept of a nuclear fuel cycle in this country would collapse, which in turn would deal a serious blow to Rokkasho’s fiscal foundation.

Alarmed by such a prospect, the village assembly in September unanimously adopted a resolution demanding that if the nuclear fuel cycle program were to be stopped, all spent fuels that had been shipped to the reprocessing facility in Rokkasho be moved out of the village immediately. It was an outright threat to both the central government and the power companies.

Spent fuel storage pools at nuclear plants throughout the country are filled almost to capacity, and would overflow if the fuel rods at Rokkasho were returned to the power plants where they originated. This would make it impossible to restart any of the nuclear plants in Japan.

A journalist who covers nuclear power issues for a major newspaper notes that Rokkasho’s special status among host municipalities gives it enormous leverage.

“It’s like a drug addict engaging in robbery to get the money to buy more narcotics,” the journalist said.

The episode shows that the system in which money flows from the nuclear community into host municipalities remains intact, and unless the link is cut off, those municipalities will continue to rely on the nuclear industry.

This is an abridged translation of an article from the November issue of Sentaku, a monthly magazine covering Japanese political, social and economic scenes.