Japan Political Pulse

The TEPCO headquarters building, center. (Mainichi)

Minister of Economy, Trade and Industry Yukio Edano and Tokyo Electric Power Company (TEPCO) President Toshio Nishizawa have clashed over the utility's future, with Edano demanding that TEPCO hand its management rights to the government in the wake of the Fukushima nuclear disaster, and Nishizawa arguing that private operation of the company should be retained.

Will reforms be forced through by state power, or will they be implemented independently by TEPCO? In this tense situation I think it is TEPCO that has the weaker hand.

The Jan. 22 morning edition of the Nikkei business newspaper's Tokyo edition featured the front-page headline "Smart meters to be introduced by TEPCO in 17 million households -- almost every home."

Smart meters are digital power meters that do not simply display the total electricity usage like analog meters, but enable users to constantly check -- and control -- how much power they use. They do not need to be checked by meter inspectors, and have been touted as instruments that could contribute to power conservation while helping cut management costs.

The introduction of smart meters is one of the special features of a comprehensive special business plan that TEPCO will compile next month. But from where the company will acquire these meters remains a point of controversy.

Under a TEPCO draft, the meters were to be purchased from a group company for 20,000 to 30,000 yen apiece -- despite the fact that the standard price for overseas manufacturers was about 10,000 yen each. Smart meters have already been put to use in the United States, Germany and Canada.

At this point, the Nuclear Damage Liability Facilitation Fund stepped in. The fund is an amalgamated union of members from the public and private sectors backing up TEPCO, amid its financial woes in the wake of the nuclear disaster. To TEPCO, it is like an occupation army. Its stance of seeking nationalization of the utility is no different from that of the Ministry of Economy, Trade and Industry.

The fund dismissed the utility's draft -- formed under a "TEPCO village" mentality favoring family companies -- and altered it to allow international bidding. The Nikkei reported the amended plan and the background behind it.

According to those with background knowledge on the amendments, it was around late November or early December last year that TEPCO presented its draft to the liability facilitation fund. It was an urgent report that the company said would be publicly announced two days later. But the fund reportedly fiercely opposed the sudden move, asking TEPCO what on earth it was doing.

Digitalization is convenient, but the system becomes delicate as a result. Furthermore, TEPCO cannot suddenly adopt a ruthless approach toward meter checkers and employees of affiliated companies. Outstanding issues remain, but at the same time, the challenge of overcoming conservatism and efforts to break away from inertia should not be viewed lightly. Isn't this a lesson we have learned from the nuclear disaster that occurred against a backdrop of collusive relationships and slack attitudes?

In exchange for formulating a general special business plan, the government is to inject 1 trillion yen into TEPCO. But the minister of economy, trade and industry, setting his sights squarely on the TEPCO president, said Feb. 13 that unless TEPCO gives the government a level of voting rights that correspond to the level of funding, then he has no intention of accepting the business plan while he remains in office.

"A level corresponding with the level of funding" means a two-thirds share of voting rights at general shareholders meetings. If the government obtains this share, it will be able to realign TEPCO's operations. This enables split handling of TEPCO's power generation and distribution businesses.

Some have received this idea in the hope that it will bring life to the economy. Others, however, have criticized it, saying that it could result in an unstable supply of power and end up destroying economic foundations.

Tokyo Electric Power Co. President Toshio Nishizawa speaks to the Mainichi Shimbun in Chiyoda Ward, Tokyo, on Dec. 7. (Mainichi)

So is the government aiming to separate the power generation and distribution businesses?

One government official deeply involved in the process commented, "We have no interest in dogmatic adherence to plans to separate power generation and distribution. What we essentially want to do is review the high economic growth system in which investment in infrastructure surged with the construction of nuclear power plants, and change it to a system suiting an age of power conservation in which no new nuclear power plants are constructed. We think someone should be brought in from outside to head the company (TEPCO)."

I respect Nishizawa for fighting his cause without remuneration, but the limits of internal reform at TEPCO have already become apparent.

The Ministry of Finance is opposed to the Ministry of Economy, Trade and Industry acquiring a two-thirds share of voting rights, as it will have to foot the financial bill if those rights are obtained. The prime minister, who has his mind set on increasing the consumption tax, has little interest in TEPCO reform. That may be the case, but at the same time I don't want the Minister of Economy, Trade and Industry to lose hope. I'm looking forward to seeing the government lead the company forward. (By Takao Yamada, Expert Senior Writer)