Today, 10 of Japan’s largest electric utilities held their annual shareholders meetings. The Wall Street Journal identified these meetings as the “Next Nuclear Battleground,” as many shareholders pushed for a reduced mix of nuclear power. Shareholders ended up voting to stick with nuclear power despite rising public opposition.
The deliberations by shareholders of Tokyo Electric Power Company (TEPCO), the owner of the Fukushima Daiichi power plant, drew much attention and The Asahi Shimbun reported, “TEPCO, financially strapped and being placed under state control because of the accident at its Fukushima nuclear plant, is under increasing pressure to change.” To provide readers with a clear picture of the significant factors and decisions leading to TEPCO’s current situation, Forum on Energy compiled this Timeline of TEPCO Ownership. Click below for more.
March 31 Moodys Investors downgrades TEPCOs debt rating from A1 to Baa1 due to the enormous costs the company will incur as it recovers from this disaster including the costs for replacement power, the building of new generating plants to replace the permanently damaged plants and the decommissioning of the containment plant. Further downgrade is possible.
April 1 TEPCO shares decline 3.7%. News reports say the government will inject funds but not more than 50%. Prime Minister Kan says he wants to see TEPCO recover as a private entity rather than as a nationalized entity. That means government funding has to stay below 50%. But Yukio Edano, Chief Cabinet Secretary says a larger injection of funds hadnt been ruled out.
May 9 TEPCO President Masataka Shimizu says the company is having difficulty raising funds. It asks the government for assistance. TEPCO continues with efforts to sell assets and restructure the company.
May 13 Japanese government agrees to a compensation plan to assist TEPCO. The plan establishes a compensation fund in which other utilities would contribute money; does not set a cap on TEPCOs liabilities, and establishes the issuance of special bonds to fund the program. Asahi Shimbun reports the government will also guarantee loans made by other institutions to TEPCO but requires TEPCO to sell off assets such as real estate to help generate cash. An independent committee comprised of lawyers and accountants will oversee the companys restructuring effort.
June 1 Standard and Poors reduces TEPCOs credit rating to junk status. Bloomberg reports that S&P downgraded TEPCO because it was having difficulty securing loans. The government urges banks to help the utility but lenders are reluctant to loan money to TEPCO over fear of having their own credit rating downgraded if TEPCO has trouble repaying its loans.
June 14 Japanese cabinet approves compensation plan to provide funding to TEPCO and submits bill to the Diet. Uncertainty exists on whether the Diet will approve the measure.
July 4 The Mainichi Daily reports a secret government bailout plan would nationalize TEPCOs nuclear operations. The plan would require TEPCO to sell off its power distribution assets and turn over its nuclear operations to the government. The utility would be allowed to keep its thermal generation business.
July 14 Chairman of Japanese Bankers Association warns TEPCO could become insolvent if parliament fails to approve a bailout package by the end of September. Reuters reports that during a press conference, the Bankers Association chairman said if no bailout scheme is passed, TEPCOs insolvency would be immediate. Japanese creditors have been urging the government to assist the utility.
August 3 Japan’s parliament approves $26 billion towards TEPCOs victim compensation fund. BBC News reports that TEPCOs compensation costs may top $100 billion.
August 29 Japan elects Yoshihiko Noda as Prime Minister. Noda, formerly Japans Minister of Finance replaces Naoto Kan who has been critical of TEPCO and has been criticized for his handling of the crises at Fukushima following the tsunami and nuclear accident.
September 15 Japans new trade minister suggests creditors should shoulder some of TEPCOs debt. According to Reuters, Yukio Edano, the new trade minister said TEPCO and the banks should negotiate how much of the burden creditors would be willing to take. The government will consider how much funding will be provided after a plan between TEPCO and its stakeholders are worked out.
September 26 TEPCO still undecided on details of debt restructuring request. Reuters reports that TEPCO was still trying to decide whether to ask the banks to waive some of the debt in exchange for a restructuring deal that would include a rate hike. TEPCO needs to increase rates to help pay for its costs but knows any rate increase will not be accepted unless it can demonstrate its commitment to a restructuring plan that will change the way the company has operated.
November 4 Japanese government approves an $11.5 billion bailout plan for TEPCO. Trade Minister Yukio Edano approves the plan to help TEPCO with compensation claims to people and businesses affected by the Fukushima accident. Bloomberg reports that TEPCOs plan includes reducing ¥2.5 trillion in costs by cutting 7,400 jobs.
December 22 BBC News reports that TEPCO announces plan to raise electricity rates for corporate clients beginning April 2012. The increased rates will generate $6.4 billion in additional revenue for TEPCO. The utility said it may have to raise rates for residential customers in the future.
December 27 TEPCO submits requests for ¥689.4 trillion ($8.8 billion) from the governments Nuclear Damage Liability Facilitation Fund to pay for victim compensation. Yukio Edano, Japans Trade and Industry Minister said TEPCO should consider becoming a nationalized company. Stocks fall to its lowest value in 37 years. Stock values dipped a total of 91 percent since the accident which reduced the companys market value by ¥3.1 trillion ($39 billion). TEPCO said it would need to raise rates or to restart its reactors to keep it from becoming insolvent. Edano counters that raising rates is not a right given to all utilities facing financial hardship.
January 10 TEPCO begins talking to banks to secure financing. Banks define three preconditions for financing: a government injection of capital; 10% increase in electricity rates; restart by next year of idled plants.
January 25 Reuters reports that TEPCO will agree to a government takeover as part of a $13 billion bailout plan. Although TEPCO has tried to resist a government takeover, it is inevitable given the governments two-thirds stake as a result of the massive financial infusion. TEPCO is reported to be drafting a corporate restructuring plan that includes requesting additional funding through creditor financing.
March 5 TEPCO shareholders sue company executives ¥5.5 trillion ($67.4 billion) in compensation. The shareholder suit claims TEPCO executives failed to respond to warning of a possible tsunami and severe accident planning. The money from the executives would be used to pay TEPCO and compensate victims.
March 29 Wall Street Journal reports that TEPCO and the government of Japan fail to reach an agreement. TEPCO asked for ¥ 1 trillion but insisted that the company remain private, not government owned. Since the utility has a market capitalization of only ¥350 billion, the capital injection would equate to a stake of more than 70%. But TEPCO and its allies in the business community are firmly opposed to giving a majority stake to the government, arguing that it is incapable of running a utility. According to the WSJ, Trade Minister Yukio Edano said the government could not use taxpayer money unless it is all allowed to have some influence over management of the company.
April 27 Dow Jones reports that TEPCO filed a plan in which it would sell controlling shares of the utility to the government in exchange for ¥1 trillion ($12.5 billion) in capital. The plan includes resignation of TEPCOs CEO Tsunehisa Katsumata and President Toshio Nishizawa.
May 8 Government appoints new CEO and president to lead TEPCO. Naomi Hirose, who was serving as managing director of the Fukushima disaster compensation fund is named president of TEPCO. Kazuhiko Shimokobe, an experienced turn-around lawyer, was named CEO.
May 9 Japans trade minister approves ¥1 trillion ($12.5 billion) injection. Government to take over more than 50 percent of the utilitys voting shares and will be able to choose board members.
May 14 TEPCO announces its candidates to make up the new board of directors. The appointments to the board are expected to be a finalized at the shareholders meeting June 27. Eleven new members are named.
May 15 Asahi Shimbun reports that potential board member Fumio Sudo may have conflicts of interest since he is also Chairman of the Board for NHK (Japans broadcasting company), which reports on TEPCOs activities. Other people to be appointed to TEPCOs board include Yoshiaki Fujimori, president of JS Group Corp.; Takao Tashikani, a certified public accountant; and Kimikazu Noumi, president of the Innovation Network Corporation of Japan. New board members are expected to be approved at the shareholders meeting on June 27.
May 21 TEPCO announces change in major shareholders of the utility. The notice states that the Nuclear Damage Compensation Facilitation Corporation is expected to become the largest controlling shareholder. The controlling shareholder now owns 50.11 percent of the utilitys voting shares.