Unprecedented Moral Hazard

Tokyo Electric Power Company made new business reorganization plan. It aimed to get rid of current virtual government-owned situation by early 2030s. To achieve that, the company assumed to raise utility charges without any plan for separating current occupation both generation and supply of electricity, to be provided with tax money for compensation for decontamination caused by the accident in Fukushima, and to resume nuclear reactors in Niigata without reliable security guarantee. The government is approving it early next year. This is unprecedented moral hazard.

The government salvaged the ailing company by capital injection worth $100 billion in July 2012, holding 50.1% stock share with voting right. Since then, the company has been laid under virtual ownership of the government. The new reconstruction plan sets a goal to reduce the share to the extent of getting rid of governmental control in early 2030s. It also divides the company between the one for ordinary power company and another company only working for disaster relief. The relief company will be located in an evacuation area in Fukushima to make its determination clear.

The biggest problem is the plan is fundamentally dependent on tax money injected into the company. It will be used for decontamination of the land around broken First Fukushima Nuclear Power Plant and establishing intermediate stock facilities for radioactive debris in evacuation area. There is no explanation about why taxpayers need to compensate for that manmade disaster caused by careless notion of no blackout happening. Tax holders and banks are responsible for the bankruptcy. In this case, they are overwhelmingly supported by tax money. This is a distorted capitalism.

With no complete roadmap for dismantling broken reactors, emitting contaminated water to the Pacific Ocean, and paying compensation for suffered people, TEPCO assumes halted nuclear reactors in Kashiwazaki-Kariwa Nuclear Power Plant in Niigata next July. For the purpose of rebuilding its balance sheet, the company is committing further immoral business taking people hostage. The company and residents around the plants ignore the voices of Fukushima: Once accident happens, they lose everything.

It is true that the disaster could not be relieved only by the efforts of TEPCO. People who accepted benefit of power generation are partly responsible for the disaster. In those regards, injection of tax money was inevitable. However, why should stockholders and banks be protected by the government? How can a business entity resume an operation that are uncontrollable for human being, while suffered people still living in shabby temporary houses and worrying about health of kids? This is not a problem about responsibility of a private company, but about civilization in Japan.