Japan's Nuclear Fleet Completely Shut Down, Power Companies See Heavy Losses

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Researched by Industrial Info Resources (Sugar Land, Texas)--Japan was the world's third-largest consumer of nuclear power after the United States and France. At least, that was the case before March 11, 2011. Since the earthquake and tsunami that day, Japan's nuclear fleet has suffered hit after hit, starting with the ongoing situation at Fukushima Daiichi nuclear power station, owned and operated by Tokyo Electric Power Company Incorporated (TYO:9501) (TEPCO) (Tokyo) , and culminating in Friday's shutdown of Japan's last operational nuclear reactor. Not only nuclear power, but also Japan's power companies themselves have suffered major hits to their profits over the past year.

Japan's nine regional power monopolies recently released their 2011 earnings statements. Of these nine, seven were in the red. The only two exceptions were Okinawa Electric Power Company Incorporated (Okiden) (TYO:9511) (Urasoe, Japan) and Chugoku Electric Power Company Incorporated (TYO:9504) (Hiroshima, Japan). The commonalities between these two survivors are their comparatively low-population service areas, and their low or non-existent reliance on nuclear energy. Okiden neither owns nor operates any nuclear power stations, while Chugoku Electric owns and operates only the 1,280-MW Shimane nuclear power station. As a result, the inability to restart a nuclear reactor from shutdown without a stress test evaluation has had little to no effect on these two companies.

By comparison, the other seven power companies in Japan are facing huge losses. In total, it is estimated that losses amount to 819 billion yen, or roughly $10 billion. One of the major factors contributing to these companies' economic troubles is their increased fuel bill, as they have to replace inexpensive nuclear fuel with more expensive fossil fuels such as liquefied natural gas (LNG) and oil.

Before the March 11, 2011, earthquake, Japan boasted a nuclear fleet of 54 reactors. Currently, of those 54, none are operational. The last reactor to be shut down since the earthquake was Tomari nuclear power station's Unit 3. Currently, reactors in Japan are forbidden from restarting until they have passed the safety evaluation, or "stress test," and subsequent evaluation by the Japanese government. As it stands, only two reactors, Oita nuclear power station's units 3 and 4, owned and operated by Kansai Electric Power Company Incorporated (Kanden) (TYO:9503) (Osaka, Japan), have had their safety evaluations reach the last round of evaluation before approval to restart. This is the first time since 1970 that Japan has had no nuclear reactors running at all.

With the notoriously hot and humid Japanese summer approaching, power companies are worried about their ability to meet power demand this summer. As a result, many companies have called for citizens and businesses to conserve electricity as much as possible. Without the comparatively inexpensive 30% of Japan's power supply that came from nuclear, power companies are being forced to consider the option of initiating rolling blackouts during the summer.

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