News Watch 94 (March/April 2003) Nuke Info Tokyo No. 94

METI Works Out New Preferential Measures for Nuclear Power

Municipalities Put Tax on Storage of Spent Fuel

Kashiwazaki City Council (Niigata Prefecture) passed a bill for a new bylaw on March 20, stipulating the imposition of a tax on the spent fuel which is now stored on the site of the Tokyo Electric Power Co. Inc’s Kashiwazaki-Kariwa Nuclear Plant. This was the first such case in the country, but now Sendai City (Kagoshima Prefecture) is planning to present a similar bill to its City Council in June. It is certain that other municipalities will follow suit.

With regard to the reason for taxation, Kashiwazaki Mayor Saikawa stated that while revenues related to nuclear power plants (fixed property tax and subsidies) have been decreasing year by year, the demands for measures related to nuclear power, including those for emergency measures, have been increasing. His explanation reveals the fact that nuclear power plants initially increase local finance both in revenues and expenditure and that revenues gradually decrease after reactor operation begins.

With the taxation on the spent fuel to cover for the revenue decrease, Kashiwazaki City expects a tax revenue of about 3 billion yen in the coming five years. The tax rate is 480 yen per 1 kg HM of spent fuel.

The Tokyo Electric Power Co., Inc. is basically opposed to this taxation, claiming that it would be a double taxation, for Niigata Prefecture puts tax on the acceptance of nuclear fuel into the site. However, there is a view in the electric power industry that taxation would be acceptable if long-term storage of spent fuel on the site were to be allowed, thus taking advantage of taxation. On March 5, the Federation of Electric Power Companies of Japan, which consists of ten electric power companies, indicated its view that although it has not decided to accept the taxation, it would accept it if more spent fuel would be allowed to be placed on the site for a longer time.

The Kashiwazaki City side reacted against the long-term storage option. A certain industry journal commented that the taxation was originally meant to get rid of the spent fuel sooner. However, if the city comes to count on the storage of spent fuel for revenue, it is inevitable that the authorities would be inclined to increase their tax revenues by allowing the spent fuel to remain longer.

FNCA Meets in Naha

The Forum for Nuclear Cooperation in Asia (FNCA) held its 4th coordinators’ meeting in Naha City, Okinawa, on March 5-7. FNCA was formed by Japan’s Atomic Energy Commission in March 1999 in order to promote cooperation with other Asian countries in the area of nuclear power. The Coordinators’ meeting is formally organized by FNCA, but it is virtually controlled by the Japanese government. In fact, the bulletin of the Japan Atomic Industrial Forum, Inc. reported that it was “held by the Cabinet Office and the Ministry of Education, Culture, Sports, Science and Technology.”

FNCA involves nine countries, i.e., Japan, Australia, China, Indonesia, South Korea, Malaysia, Philippines, Thailand and Vietnam, with the International Atomic Energy Agency (IAEA) as an observer. The coordinators’ meeting was attended by coordinators of these countries and other concerned parties. Okinawa Prefectural governor Inamine attended the opening ceremony, stating that making melon flies infertile by irradiation helped get rid of them. During the meeting Japan requested the members to add the construction of new reactors to the Clean Development Mechanism for prevention of global warming. China and South Korea are said to have agreed.

METI Works Out New Preferential Measures for Nuclear Power

The Ministry of Economy, Trade and Industry (METI) is trying to prolong the life of nuclear power by working out new preferential measures. It aims to secure appropriate investment so that electric companies would not retreat from nuclear power to avoid risks in the midst of the situation in which liberalization of electric utility industries is expanding.

A bill for a partial revision of the “Law for the Adjustment of Areas Adjacent to Power Generating Facilities and the Special Budget Law for the Development of Electric Power” was submitted to the Diet. It means to review the system of the so-called special subsidies for power development, the subsidies for power plant siting. These financial schemes were created to promote the establishment of all kinds of power stations, but are said to have been revised to selectively assist the siting of nuclear power, hydro-power and geothermal power plants. In substance the subsidies will be intensively put into nuclear power and nuclear-fuel cycle facilities. New subsidies will be granted for the Plu-thermal project and financial backing will be increased for storage of spent fuel (revision of government ordinance). The target projects for subsidies will be greatly expanded, for example, to the promotion of local industries and welfare services.

Under the current system the power output is calculated by multiplying the plants’ generation capacity by a certain ratio of utilization. This will change to make the actual power output a standard for subsidy, or to add something extra by taking the power generation achievement into consideration (Grant regulations = revision of notification). It is a scheme to have local governments cooperate in the policy, which puts priority on safety in operation.

Most of the subsidies will not be disbursed unless the construction of a reactor does get under way; otherwise they are left as surplus funds. With a large amount of the surplus generated every year, the General Accounting Office has required improvements on the matter. The step which has been taken to improve the situation is the establishment of the Fund for the Adjustment of Areas Adjacent to Power Generating Facilities, which allows surplus funds to be accumulated until the time when the funds can be used.

Another preferential measure is to improve the rule for transmission lines, for example, the rule for securing the capacity of a transmission line. This is a rule to control new thermal power entrants during the periods when power demand falls, such as mornings of New Year days and the “Golden Week” (Japan’s seasonal holidays during the first week of May), in order to guarantee the operation of nuclear power plants. It is a relief measure for nuclear power, which cannot be adjusted in its output. Concretely, electric companies can make use of conditions for “the prioritized order for load dispatching,” which has already been stipulated in the Electric Utility Law, and the rule is set to compensate existing electric power companies for the financial damages incurred by new entrants.

There is also a development of the rule for securing the capacity of transmission lines. As the capacity of the basic transmission lines which are used for trading power among the utilities is limited, the rule aims to preferentially allow power generated by nuclear plants to be transmitted. The electric power companies which owens many nuclear power plants, will not be able to maintain its profit without selling powers to other electric companies. Therefore, deciding whether or not to secure the capacity of a transmission line is a matter of life or death for them.

Furthermore, additional rescue measures are set to be considered next year. These mean that the government is to shoulder the costs incurred by the back-end measures.