Electric power companies can turn loss into profit after nuclear power plants are shut down. Here is the story of how Japan’s Chubu Electric Power Co has gone about it.
Chubu Electric supplies electricity to the area around Nogoya.
In the aftermath of the 2011 Tohoku Earthquake, the company suspended operation of its only nuclear power station — the Hamaoka nuclear power plant — on government instructions.
The main reason the Japanese government ordered the Hamaoka plant to shut down was its location. The plant is in a fault zone where powerful earthquakes are considered likely to occur. Furthermore, the plant is close to urban areas. If there is an earthquake, the Tokaido Shinkansen high-speed railway and the Tomei Expressway, the main traffic arteries connecting eastern and western Japan, would probably be shut down. And the nearly 1 million people living within the 30km-radius evacuation zone would have to move. After the 2011 Fukushima Dai-ichi nuclear disaster, the government knew that an evacuation on such a scale would be an unbearable burden, and that is why it insisted that the plant be shut down.
The government’s demand that the Hamaoka plant be shut down gained support from business leaders such as the chairman of Suzuki Motor Corp. For Suzuki, the electricity price hike that would follow was a calculable cost, but Suzuki’s headquarters are located within the plant’s evacuation zone and the costs it would incur in the event of a nuclear disaster would be incalculable.
Following the facility’s shutdown, Chubu Electric has returned losses for three years in a row. However, the company is forecast to turn loss into profit this year.
One of the reasons for this potential turnaround is that Toyota Motor Corp is in the Nagoya region, making it one of the main bases of Japan’s automotive industry and generating good business for industrial electricity supply.
Another reason is increased electricity rates. And while Chubu Electric expects to gain ¥134.5 billion (US$1.32 billion) from electricity rate hikes, it hopes to save ¥191.5 billion by improving its own efficiency.
In its initial application to the Japanese government to raise electricity rates, Chubu Electric planned to save ¥163.3 billion through efficiency improvements and gain ¥162.7 billion in revenue by raising electricity rates. In other words, the company intended to absorb half of the costs incurred after shutting down the nuclear reactors by improving its management efficiency, while getting consumers to absorb the other half.
However, the Japanese government turned down this plan on the grounds that the firm was not trying hard enough.
The plan the government approved was for Chubu Electric to absorb 60 percent of the costs through its own efforts, as seen from the figures given above, and still making it possible for Chubu Electric to make a profit.
After improving its defenses against earthquakes and tsunami, the Hamaoka plant is applying to the government to restart operations. Whether the plant will eventually start running again remains uncertain. Nonetheless, the example set by the Hamaoka plant shows that if Taiwan Power Co ever has to raise electricity rates because of an end to the construction of the the Fourth Nuclear Power Plant in Gongliao District (貢寮), New Taipei City, the company should be able to absorb part of the costs by making itself more efficient.
In the Japanese case, the reduction in expenditure brought about through efficiency measures is no less than the increased revenue gained by raising electricity rates.
Guo Yung-hsing is an associate professor of economics at Chinese Culture University.
Translated by Julian Clegg
Because much of what former US president Donald Trump says is unhinged and histrionic, it is tempting to dismiss all of it as bunk. Yet the potential future president has a populist knack for sounding alarums that resonate with the zeitgeist — for example, with growing anxiety about World War III and nuclear Armageddon. “We’re a failing nation,” Trump ranted during his US presidential debate against US Vice President Kamala Harris in one particularly meandering answer (the one that also recycled urban myths about immigrants eating cats). “And what, what’s going on here, you’re going to end up in World War
Earlier this month in Newsweek, President William Lai (賴清德) challenged the People’s Republic of China (PRC) to retake the territories lost to Russia in the 19th century rather than invade Taiwan. He stated: “If it is for the sake of territorial integrity, why doesn’t [the PRC] take back the lands occupied by Russia that were signed over in the treaty of Aigun?” This was a brilliant political move to finally state openly what many Chinese in both China and Taiwan have long been thinking about the lost territories in the Russian far east: The Russian far east should be “theirs.” Granted, Lai issued
On Tuesday, President William Lai (賴清德) met with a delegation from the Hoover Institution, a think tank based at Stanford University in California, to discuss strengthening US-Taiwan relations and enhancing peace and stability in the region. The delegation was led by James Ellis Jr, co-chair of the institution’s Taiwan in the Indo-Pacific Region project and former commander of the US Strategic Command. It also included former Australian minister for foreign affairs Marise Payne, influential US academics and other former policymakers. Think tank diplomacy is an important component of Taiwan’s efforts to maintain high-level dialogue with other nations with which it does
On Sept. 2, Elbridge Colby, former deputy assistant secretary of defense for strategy and force development, wrote an article for the Wall Street Journal called “The US and Taiwan Must Change Course” that defends his position that the US and Taiwan are not doing enough to deter the People’s Republic of China (PRC) from taking Taiwan. Colby is correct, of course: the US and Taiwan need to do a lot more or the PRC will invade Taiwan like Russia did against Ukraine. The US and Taiwan have failed to prepare properly to deter war. The blame must fall on politicians and policymakers